Looking to invest? Have already done the desired shopping? Need assistance to extrapolate the right investment instrument from the available lot of investment options? It might seem difficult initially, but if you have already observed the market and identified the mistakes, you can easily sail through this expedition.
Let us have a look at the different investment blunders one needs to avoid.
- Many investors usually start making investment or choosing their plans when they have not shopped around. This group of investors choose their products without real planning and hence fall into the trap of risky investment plans and thus lose out on their initial venture.
- Due to the lack of planning, and the inability to differentiate between different stocks, these investors usually end up buying cheap stocks. These stocks annihilate any good future returns for the investor.
- There are many different kinds of stocks available in the financial market. So you may even come across a few story stocks, for example, something related to the lullaby for children, future inventions etc. and these stocks may grasp the attention of a few novice investors. Usually these story stocks are too good to be true. So one needs to avoid leaning on to such stocks.
- Usually investors lack the knowledge of the “best-time to sell” their instruments. This is a crucial decision in one’s investment planning and needs to be identified correctly in order to avoid the doom of a bright investment horizon.
- The next mistake that the novice investors appear to do, is selling the winning stocks at the wrong time, or when their value is not appreciated in the market. These stocks are entitled to offer huge returns to the investor if sold at the right time.
- While investing into the financial market, investors, even though, plan their portfolio, but the diversification of the investment portfolio is not done to the core. You may have good investment plans, but they are a few. Therefore, before you enter into the investment undertaking, you should have a well-built portfolio with good number of options available to provide you with a strong anchorage.
- If under-diversification of your investment portfolio is not recommended, the over-diversification of your portfolio is also prohibited, as it may expose your weakness and you may end up taking the wrong stocks.
- You are a beginner and pick up stocks/shares that rise in the market every season. And thus you end up buying a large number of stocks thinking of high returns. This does not appear to be a good idea to venture into the market as more the number of stocks, the more risk is involved.
- Choosing too many options may also create hindrances in your path of achieving insurmountable returns. As more the options, more the planning required to identify the appropriate timing to sell these options. And it may become unmanageable at times.
- Buying stocks with low margins is again an unidentifiable task to the investor. But if this task is accomplished, you may be agog at your profit making spree.