Money expert and YouTube personality Jaspreet Singh has a lot of useful tips for financial literacy, but none might be more important than his latest video on “Investing Mistakes That Will Cost You Thousands.” In the video, Singh breaks down seven things not to do if you’re looking to invest because they will cost you money rather than earn you profits.
Be Aware: Here’s How Much a $1,000 Investment in Ford Stock 10 Years Ago Would Be Worth Today
Learn More: $10K or More in Debt? See If You Could Become Debt-Free (for Less Than You Owe)
If you are new to investing and looking to up your game, pay attention to these tips from Singh and watch your money grow. Singh admits up top that he has made a lot of costly mistakes throughout his financial career, but at the same time, he’s learned a lot.
Here is what Jaspreet Singh says about not making the following seven investing mistakes that could cost you.
Also see skills that can help you build wealth, according to Singh.
Wealthy people know the best money secrets. Learn how to copy them.
Trusting a Random Person With Your Business Decisions
Singh recalled making the mistake of listening to a contractor in Detroit about purchasing a piece of property. It was only Singh’s third time buying real estate and instead of doing his research, he took the financial advice from someone he did not know.
“After I purchased the property, I realized that the only reason my contractor wanted me to do this deal was because he needed money,” Singh said. “So I wrote him a check to do that work. He took the money … and did some other things with it. He didn’t do the work on my property. I had to find a new contractor to do the work. I had to pay the new contractor to do the work. The second contractor screwed up the work. And we realized this property had a lot of issues.”
Singh eventually sold the property at a loss because he did not want to deal with all the issues that had piled up.
“But I learned that if I’m investing my own money into a deal, it is my decision, not anyone else’s,” Singh said. “Always do your own research because no one is going to care about your own money like you do.”
Trending Now: In 5 Years, These 2 Stocks Will Be More Valuable Than Apple
Don’t Put All of Your Eggs in Timing the Market
“If you can time the market perfectly you will make a lot of money,” Singh said, offering the example of how much people could make between 1930 and 2020 if they only invested in the best days and avoided the worst days.
However, Singh noted this is a bit of an impossibility.
“The problem is that you’re probably not going to be able to time the market perfectly,” Singh said. “This is why, for most people, having your money in the market for a longer period is the best way to go.”
However, Singh noted that you can take advantage of downturns.
“You can use downturns to come in and buy more aggressively,” he said. “That way you can get even bigger returns. But you cannot perfectly time the market.”
Singh advised creating a set-it-and-forget-it system where you invest on a timetable that works for you with an amount you have budgeted properly.
Being Cheap Is One of the Most Expensive Things You Can Do
Singh pointed out that you might think you are saving money by hiring someone who offers a lower cost for their services.
Unfortunately, Singh found out the hard way that you often get what you pay for — while the price might be lower, it costs you in the long run.
“Especially if these are people working to make you money,” Singh said. “You want to make sure that you have somebody who’s looking out for your best interests and making sure that your deals, your properties, your investments are maximizing your revenue instead of something they’re just doing on the back burner.”
Not Understanding What It Means To Diversify
Singh started this tip by citing Warren Buffett, who said, “Diversification is for people that don’t know what they are doing.”
Singh’s take on diversification is that it all comes down to your goals and perspective on money.
“If you don’t trust yourself as an investor then you want to diversify. Because then if you do something wrong, you have a backup plan,” Singh explained. “But if you trust yourself and you want to see the big potential returns and go all in, then you don’t diversify but you’ve got to understand you are taking all the risk.
“What you’re doing depends on you,” Singh stated. “Real diversification means investing your money in different asset classes.”
These classes could be stocks, real estate, your company and anything else that fits your investment goals.
Don’t Trade the News
When it comes to news about the stock market and personal investments, Singh said, “It’s easy to get caught up in what’s happening in the day-to-day because the stock market can go up and down in the blink of an eye.”
Singh suggested not getting caught up in the emotions that come with the ebbs and flows of the markets. “You don’t want to be the persona chasing and going behind these emotions because, over the long term, the stock market follows fundamentals and financials. As an investor, you want to invest your money for the long term.”
Don’t Ignore Your Costs
Singh described how two types of costs — fees and taxes — destroy all the wealth you’re building.
When it comes to fees, Singh said, if you “invest your money to the stock market through funds there are some funds that are going to charge you higher fees than others.” Most likely it will come in the form of an expense ratio that comes to 0.07% or 0.85% fee, which can make a big difference in how you build your portfolio.
As for taxes, Singh said, “Our tax code has a lot of interesting loopholes, especially for investors. … Understand that taxes are a huge cost but as an investor, you can potentially pay less tax money because that’s what the tax code says.”
Don’t Live Off Your Equity
Instead, Singh advised that you live off your income. This will help prevent any financial disasters if the economy takes a hit.
“This is what’s destroyed so many investors, including the ones that have become multi-millionaires,” Singh said. “This is the reason so many investors end up bankrupt. Because you stop living off the income and start living on the equity.”
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Jaspreet Singh: Don’t Make These 7 Investing Mistakes That Could Cost You