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Knowing the pitfalls is the first step to making smarter money decisions.
12 February, 2020
- Taking control of your money and making better financial decisions is something that everyone can and should do.
- There is a bit of a learning curve when it comes to investing. A big part of making money is learning how to avoid common mistakes.
- Buying cheap stocks instead of smart ones, being too reactive to news headlines, and thinking short term are a few of the things that new investors often get wrong.
<p>You want to start making better choices and take control of your money, but how? For those new to the world of investing, taking that first step can feel daunting and confusing. Helpful acronyms, numbers, and terms to learn are written in a language you don't yet speak. With a little time, the right resources, and a willingness to learn, the dream of one day managing your money smarter can become a reality. For beginners and seasoned investors alike, a big part of making money is being able to identify and avoid making common mistakes.</p>
M1 Finance<p>A useful (and free) personal finance tool for investors at all levels is <a href="https://m1finance.8bxp97.net/76BPy" target="_blank">M1 Finance</a>. It's a commission-free investing and money management app that was recently rated #1 for Sophisticated Investors and #1 for Socially Responsible Investing by Investopedia, beating out competitors like Personal Capital, Vanguard, and Betterment. Available for Android and iOS devices, M1 Finance lets users create a portfolio of stocks or exchange-traded funds (ETFs) for free. Investors can also borrow from a flexible portfolio line of credit with a low base rate, and M1 is currently beta testing FDIC-insured checking accounts with debit cards that investors can use instead of their existing checking account. To find out more about how it works and to sign up today, <a href="https://m1finance.8bxp97.net/76BPy" target="_blank">click here</a>.</p><p>As you set out on your investing journey, here are a few common mistakes to avoid:</p>
Don’t focus on the short term.<p>Treating the stock market like placing a bet is a strategy that probably won't work out for you. Successful investor Warren Buffett warns new investors against day trading. "If you aren't willing to own a stock for 10 years, don't even think about owning it for ten minutes," <a href="https://www.berkshirehathaway.com/letters/1996.html" target="_blank">Buffett wrote</a> in a letter to shareholders back in 1996. Buying and selling stocks quickly may get you a few dollars, but making a smart investment in a good company and sticking with it over a long period of time could make you exponentially more. </p>
Don’t buy what you don’t understand.<p>Never buy a piece of a company when you don't understand how it makes money. Do your research and learn about the industry and the mechanisms that move it, otherwise the money you invest could disappear and you would have no idea why.</p>
But don’t only buy what you know.<p>According to <a href="https://www.investopedia.com/articles/stocks/07/beat_the_mistakes.asp" target="_blank">Investopedia</a>, novice investors (and those with experience) should probably stick to the principle of diversification. In poker terms, you don't want to "let it ride" on one big stock in the hopes that your money will double or triple. Create a portfolio and spread the money around. As a general rule according to the experts, never allocate more than 5-10% to any one investment.</p>
Don’t use your retirement money.<p>Risking your livelihood on investments is dangerous and ill-advised. If losing the money you are thinking of investing would ruin your life or the lives of those around you, then you absolutely should not do it.</p>
Find good investments, not cheap ones.<p>In the same vein as the first tip, it's important for new investors to learn that just because they can afford to buy a stock, that doesn't mean they should. The idea of investing early in the next Google and riding the wave to wealth is enticing, but that's not a realistic strategy. Tried and true is often better than shiny and new.</p>
And lastly, don’t overreact based on the news.<p>Hearing about a tanking stock on the news can be scary if that company is a part of your portfolio, but experts warn against letting your emotions get the best of you. Consider the history of the stock and whether or not the reason for the dip is something that could soon pass. If you panic and sell because of a headline, you could regret it next month when that dip turns into a spike.</p>
<p><em><em><em><em>When you buy something through a link in this article or from <a href="https://shop.bigthink.com/" target="_self">our shop</a>, Big Think earns a small commission. Thank you for supporting our team's work.</em></em></em></em></p>
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Did Elon Musk invent Bitcoin? The mystery surrounding the creator of the world's most popular cryptocurrency deepens.
23 December, 2017
Credit: Getty Images
<p></p><p class="p1">Bitcoin has taken investors for a ride in 2017, its price rising astronomically from less than a $1000 per coin earlier in the year to peaking at $20,000 by its end. It has its <a href="http://bigthink.com/paul-ratner/is-now-the-right-time-to-invest-in-bitcoin-or-should-you-stay-away" target="_blank">share of detractors</a> and <a href="https://www.cnbc.com/2017/12/22/bitcoin-plunges-below-12000-on-coinbase-as-rout-accelerates-now-down-40-percent-from-record.html" target="_blank"><span class="s1">a recent price drop</span></a> of 27% of its value underscores the unknowns and the volatility inherent<span> to</span> this 21-st century currency. Regardless, one person who probably benefited tremendously from the cryptocurrency's booming popularity is its inventor, <a href="https://qz.com/1159188/bitcoin-price-approaches-20000-making-satoshi-nakamoto-worth-19-4-billion/" target="_blank"><span class="s1">becoming</span></a> the world's 44th richest person on account of owning around a <a href="http://mashable.com/2017/12/12/bitcoin-satoshi-trillionaire/#lyLMHKB5mZqV" target="_blank"><span class="s1">million bitcoins.</span></a> The only problem is, we don’t know who that person is, or if they even exist at all.</p> <p></p><p class="p1">The mystery surrounding the creation of Bitcoin is one of its unique characteristics. In 2008, someone named <strong>Satoshi Nakamoto</strong> published a <a href="https://bitcoin.com/bitcoin.pdf?utm_source=get-started&utm_medium=post&utm_campaign=info&utm_content=how-bitoin-transactions-work" target="_blank"><span class="s1">paper online</span></a> titled <em>“Bitcoin: A Peer-to-Peer Electronic Cash System”.</em> The paper, posted to a cryptography mailing list, described how the digital currency would work.</p> <p></p><p class="p1">In 2009, Nakamoto released software for the currency, which utilized the concept of a <strong>blockchain </strong>as its core design component. The invention of the blockchain is an influential achievement in its own right as this technology, that uses a <a href="https://en.wikipedia.org/wiki/Distributed_ledger" target="_blank"><span class="s2">distributed ledger</span></a><span class="s3"> to record transactions between two parties in a verifiable and permanent way, has been adopted by other cryptocurrencies and is now even <span class="s1"><a href="https://www.siasat.com/news/dubai-plans-become-worlds-first-blockchain-powered-government-1285518/" target="_blank">powering governments.</a></span></span></p> <p></p><p class="p1"><img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8xODI0MDY3Ny9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYzMjA4Nzg0M30.Lrxp5Z1w4y4BhSRoaJPumk-dRIKckYY_BIjLuHbXpFk/img.jpg?width=980" id="b0f2f" class="rm-shortcode" data-rm-shortcode-id="493f4ad7ba24712b8b87bc2b108b486c" data-rm-shortcode-name="rebelmouse-image"></p> <p></p><p class="p1"><span class="s3"><span class="s1"><em>A man looks at ATM machines (L and R) for digital currency Bitcoin in Hong Kong on December 18, 2017. (Photo credit: ANTHONY WALLACE/AFP/Getty Images)</em></span></span></p> <p></p><p class="p1">While he was so instrumental to the existence of bitcoin, also creating <a href="https://bitcoin.org/en/" target="_blank">bitcoin.org</a> in 2010, who Satoshi Nakamoto really was never became clear as all communication with him was online. In his profile, he claimed to be a Japanese man born in 1975, yet his perfect English had many doubting whether this identity was true. A number of people were pinned as being Satoshi Nakamoto over the years, like the Australian academic <a href="https://www.theverge.com/2016/5/5/11595904/bitcoin-satoshi-nakamoto-identity-craig-steven-wright" target="_blank"><span class="s1">Craig Steven Wright</span></a> but no one theory about him stuck permanently.</p> <p></p><p class="p1">One person who could have created Bitcoin? Elon Musk. The notorious entrepreneur is so known for starting iconic and transformative tech businesses that eventually the internet pointed its finger at him. In fact, a <a href="https://hackernoon.com/elon-musk-probably-invented-bitcoin-9d6c7b7f9c3b" target="_blank"><span class="s1">Medium post</span></a> by the former SpaceX intern Sahil Cupta pointed out a number of factors that could have connected Elon to Bitcoin.<span> </span></p> <p></p><p class="p1">As proof of the fact that the SpaceX CEO could have done it, he cites Musk's polymath ways, with extensive knowledge in many varying fields like economics, cryptography and programming. Gupta also singles out the language of the original paper as similar to Elon’s, even conjecturing that the name “Satoshi Nakamoto” sounds made-up and could really be an anagram for the phrase “So a man took a shit” - the kind of less-than-adult humor Elon is sometimes prone to.</p> <p></p><p class="p3"><span class="s4">Responding to Gupta, Elon Musk <a href="https://www.cnbc.com/2017/11/28/elon-musk-denies-he-is-bitcoin-creator-satoshi-nakamoto.html" target="_blank"><span class="s1">flatly denied</span></a> he created Bitcoin, sounding quite dismissive of the whole thing. “</span>A friend sent me part of a BTC a few years, but I don’t know where it is,” he claimed in a tweet, as if to say it’s something that doesn’t even cross the field of his attention.</p> <p></p><p class="p3"><img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8xODI0MDY3OC9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTU5ODIwNDIwM30.3pKuU1ewB51YfwFhX0OG6b1OK8Xnqw4Gvr1g9tK-nCU/img.png?width=980" id="d331f" class="rm-shortcode" data-rm-shortcode-id="6e86fb2810ced6ff6299711de55c2379" data-rm-shortcode-name="rebelmouse-image"></p> <p></p><p class="p3">Surely, Musk is just the kind of person to create a world-changing technology on a lark and stay silent about it out of some conviction or simply because of not being sure if it would work. But for now, we’ll have to live with his word that it’s not him and wonder if the real Satoshi Nakamoto will ever stand up.</p>
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bitcoin Elon Musk cryptocurrency etherium Satoshi Nakamoto mystery stock market money economics Japan SpaceX