Investing seems to be stress-free from outside but the first time investors find this a myth. Investing takes time, effort and patience. Everyone works hard to earn money and then invest it so that the money can grow and we can fulfill all our necessary needs like buying a house, buying a luxury car, going on vacation.
When you are investing in shares there is always a risk, because investing in shares is subject to volatility in the market. Only selecting the right stocks is not successful investing. Inorder of successfully invest we should avoid simple mistakes.
To make mistakes is a human tendency, but we always learn from mistakes. First time investors often make mistakes because they have lack of knowledge and experience.
Investing without a plan
While investing one most common mistake made by investors is a lack of proper investment goal. You should always make a proper investment goal and objective and then use the best tools in order to achieve these objectives. Not having a proper goal or objective can result in erratic results. In order to avoid such an investment mistake just take some time to make a financial plan before investing. Always identify your goals and then pick up a strategy. Once can have various goals or objectives like-saving money for a child’s education or creating a retirement fund, planning is very important.
Going with the market trend
There are some investors which give too much importance to the written financial media. This is the common mistake in stock trading, to time the market. To time the market is a very challenging task as even the experienced investors fail to do this right. Always referring to financial news before investing can make investors lose a huge chunk of money.
In order to avoid this, while investing you should not always refer to the market trend, but should also do-self study before believing any kind of trend.
Having no patience
Being patient is very essential for a successful investment/trading journey. If you are new to investing people think of profits at a very early stage and often lose their patience. Patience is very essential for a successful trading journey. Lack of patience can turn a high profit making share into a moderate or low return giving share if you don’t be patient for the share to grow.
Depending on the investment manager
As investing involves money so there is always a risk of money loss. It is a good practice to consult an investment manager and take help from him. Having confidence in the ability of the investment manager is good. But always being dependent on the investment manager for every investment is not right.
Person needs to always be self-dependent and make research by himself also to avoid any kind of risk.
Reshuffling Your Investment Too Often
Following someone’s style of working is what people often do. And in the investment world it is very prominent. When we see that someone is getting profit or good returns, then some investors try to follow the same thing. When some investors follow the herd they try to reshuffle their investment portfolio too early, and this eats your overall returns.
Frequent shuffling of portfolios disturbs the growth of investment as some funds, like equity funds perform well only in the long run. When you shuffle your investment and invest in a new plan then you are back to where you started. This will take more time to realize your goals, and you will also miss various opportunities.
In order to invest, it is important to have confidence in the shares. But once the shares start doing well some investors invest all their money with the same share.
And If you haven’t invested with some other securities then serious damage can be done if the investor is wrong. Therefore, it is not good to be greedy.
Investing Based on Recommendations
Usually taking advice from your friends and wellwishers matters a lot but in matters of finance and investing you always do research. When we talk about stock investing, depending upon the advice of your friend and investing and simply buying the stocks what they bought is not the best way. This is because different persons have different risk profiles and financial objectives which may be different for you and not work in your case. So conduct your research as well when others are giving you advice and convince yourself thoroughly. When you are fully satisfied then only invest.
Borrowing money or Buying Shares
Some investors lend or borrow money from a bank or broker in order to purchase a share. This strategy is used by various professionals of the stock market. When the share price increases, they sell their shares and try to take care of their debts. But will the share of price always increase? When there is a fall in share price and you suffer loss, then the debt increases more.
Some small investors take loans from their family and friends instead of banks. In case the investment is unsuccessful and you end up making losses, then only broken friendships and broken families are left.
|In order to start investing a Demat account is must. A Demat account allows investors to buy, sell and store stocks, bonds, ETF’s, mutual funds etc. in electronic form. A Demat account works similar to a bank savings account. In savings accounts you can store cash in electronic form in a bank, while in a Demat account you can store securities. So open a Demat account on ICICI Direct and SAMCO and start investing in the stock market.|
In order to avoid mistakes, one needs to know about the stock market.
One should have not only theoretical knowledge but also practical exposure to avoid common mistakes in the stock market.
Above all, one should be patient and have faith in one’s abilities and should ignore rumours and other people’s advice.
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