7 Key Signs You’re Investing in the Wrong Things

Trying to figure out how to invest your savings can be confusing. After all, you want to ensure your money’s working for you. You also likely want to focus on minimizing your chances of losing money due to a risky investment.

While it’s challenging to always make the correct investment due to external market conditions, some signs indicate that you’re consistently investing in the wrong things. 

What are the key signs that you’re investing in the wrong things? Let’s take a look.

“If you’re not beating the inflation rate, your investments aren’t aggressive enough and won’t pay off in the long run,” said Scott Lieberman, founder of Touchdown Money.

If you’re not seeing any returns from your investments, you’re likely allocating your funds toward the wrong assets. Even though ensuring returns is difficult, you should see some results. There’s no sense in investing your money and taking risks if you won’t get anything from it. 

With inflation soaring, it’s vital to ensure your savings are at least keeping up. This is why many financial experts recommend leaving your funds in a high-yield savings account for higher payouts. 

“If you’re constantly worried about your investments, you’re likely being too aggressive with your portfolio,” said Lieberman.

Risky and poorly thought-out investments will stress you out. When you’re stressed out, you could make poor short-term financial choices that hurt your savings. 

There’s more to life than just worrying about money. You don’t want to constantly worry about what will happen to your savings. Target investments that match your risk tolerance. 

“Excess fees are also a sure sign of a problem,” said Lieberman. “Ideally, you want to have low fees that offer real value for their services. I recommend assessing your portfolio quarterly.”

You want to inspect your investment accounts to see how much you spend on fees. If you’re spending too much on fees, it’s time to make some changes. While some investment fees are expected, you want to be sure the returns are worth it.

“The biggest sign someone is investing in the wrong investments is when they can’t explain to someone else what they are actually investing into,” according to Jeff Rose, CFP and founder of Good Financial Cents. “I’ve encountered investors putting their money into complex insurance and annuity products that sounded good when they were in the office of the advisor that sold it to them. But I when I asked for more info about the investment and how it was supposed to meet their financial goals, they were clueless.” 

Ideally, you want to be confident about where you’re leaving your funds. There’s no sense in rushing into some complex investment if you’ll be confused about where your money’s going. 

“You have to know what your money is going into,” said Rose.

While you can find actionable investment advice on social media, you don’t want to trust your financial future with anonymous strangers you’ve never met.

It’s critical that you only take financial advice from trusted professionals with proven track records. You don’t want to get caught up in the hype of a speculative asset because of a social media post.

While high-yield savings accounts provide a decent rate without many risks, the reality is that you shouldn’t expect high returns without some risks.

If you can’t handle the risk, then you’ll want to think twice about how you’re investing your money. 

When investing your money, you need to do your due diligence on possible risks and returns. You want to know what you’re getting yourself into.

You want to learn as much as possible about investments to know where your money’s going. You work hard for your money, so you want to be diligent about where you put it.

Patience is one of the biggest challenges with investing. After all, you’ll likely want rapid results and huge returns overnight.

Sometimes, the best thing to do is to wait since we can’t control market fluctuations. These signs will help you determine if you’re consistently investing in the wrong assets so that you can adjust accordingly. 

“If you’re on a good upward trend, you’re likely in the right investments. If not, either the fees or your strategy might be off,” said Lieberman.