Investing Mistake #6: Speculating

There is a big difference between investing and speculating. However, it is a common mistake to get them mixed up. 

Speculating is when we see something that excites us, believe it’s going to make us a lot of money, and pour our savings into it- when there is no prior evidence that it will do any such thing. 

It is an easy trap to fall into when the media and the people around us exalt whatever the latest trend is. Buzzwords like “it’s the future of…” are used liberally. The future of communication, the future of retail, the future of money.  

And perhaps they might be. But there is no history to show that they’ve produced consistent returns in the past and, as we’ve discussed before, no one can know the future. 

It can be fun to place bets, just like it can be fun to try your hand in a casino. But, when deciding where to put our long-term savings, it’s important to ensure we are investing in something that has a solid history and a good reputation. Not speculating on whatever the latest fad is. 

After all, gambling on our future by trying to guess the future sounds like trouble.

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