First of all, what are informed investment decisions?
To put it simply, informed investment decisions are choices you make with a lot of background knowledge and evidence supporting them. You feel confident investing your money in something because all the information you’ve gained suggests it’s a smart idea.
On the contrary, uninformed investments are decisions made with almost no evidence behind them. You make them on a whim, which tends to mean they’re terrible. It doesn’t matter if you’re investing in crypto, real estate, gold, stocks, or anything else; you need to make informed investment decisions at all times.
This may sound easy and obvious, but you’ll be amazed how many people don’t do it. That’s why this post will show you some clear and easy ways to remain informed and avoid making uninformed decisions with your money!
Conduct a lot of market research
Carrying out market research means you dedicate your time to learning about the markets you’re interested in. For example, a real estate investor will bury their head in data about the property market to figure out which investments make the most sense. Aby Galsky – the CEO of a top real estate investment firm – goes on record to say that effective market research is fundamental to making informed investment decisions.
He recommends using data-driven analytics to fully grasp the markets you’re interested in so you’re always on top of emerging trends. The act of market research will keep you informed, so you never make a decision without lots of evidence and ideas backing it up.
Consult with experts
You might assume that market research is all that’s needed to make informed decisions. However, loads of new investors fall victim to common investment biases when going at it alone. Yes, you’ve done a lot of research, but you either consciously or unconsciously make decisions based on your interpretation of the research. This can lead to some pretty poor ideas that cost a lot of money.
As a result, you should consult with other experts in your chosen field. Get their opinion on things to avoid biases. This could be as simple as hiring an investment manager or broker to help you spend your money. Your research, combined with their expertise, helps you stay on top of things and make better decisions.
Avoid snap decisions
There will be instances when something happens, and you feel the urge to make a snap investment decision. An amazing example is a property investor who suddenly sees an old house up for sale in their local area. It looks like a prime opportunity; the asking price is low, so they make a snap decision to go for it.
In the end, the home turns into an endless money pit that drains their finances, so they sell it for a big loss. Had they spent an extra moment or two researching the property, they’d have found all of its issues and would’ve known to avoid it. Snap decisions undo all of your hard work, as they’re not based on anything other than a gut feeling.
Take one main piece of advice from this guide: avoid making uninformed investment decisions. Don’t jump the gun when an opportunity arises; it pays to do some research, talk to an advisor, and then decide if the investment is worth the risk.
