SACRAMENTO, Calif. — Making the most of your money is an important tool for financial success and investing is a good way of putting your money to work.
An expert details three common investment mistakes to avoid that could cost you money.
“When it comes to investing and having success in investing — the less emotion you can have, the more objectivity you can have — I think overall, long-term you'll have a higher probability of success,” said Towerpoint Wealth president Joseph Eschleman.
Emotional investing
Fear and greed are powerful emotions, and when it comes to money, don’t let them steer you off track. Eschleman says you could be tempted to make bad decisions even if the economy is doing well or poorly. Stay rational or objective and stick with your plan.
Information overload
We can’t get enough of our phones these days, but with advertisements on social media, emails and even texts from our friends, information spreads fast. Not all of it is helpful, especially when it comes to investment advice.
“Inherently, there's some sizzle and some sexiness to those type of ideas," said Eschleman. "It does kind of fly in the face of having a cohesive overall objective plan in place."
He said people should not fall for hype, trends or alluring headlines. He suggests being steadfast in strategy and not being distracted or gambling for short-term gains.
Uncle Sam
There’s no avoiding taxes, so don’t let your dislike for taxes keep you from helping your money grow.
For example, one investment you can make is owning bonds. The interest you earn on California municipal bonds is tax-free, and that’s good news. However, the interest rate is lower on California municipal bonds than some other bonds that are taxed.
“If you have a California municipal bond at 2%, you're not paying any tax, so you net 2%. If you have a regular bond that's paying 4%, maybe you pay 1% in taxes, but you're still netting (3%) overall,” said Eschleman.
The bottom line? Crunch the numbers of your investments. You could still end up earning more money even if you had to pay taxes on it.
WATCH MORE ON ABC10: Understanding California's new income tax rate and who it impacts
