Mistakes are an essential part of the learning curve. If you don’t make a mistake you don’t get to know what is right and what is wrong for you. There are two ways of learning from these experiences. One is called a smart path, where you learn from the mistakes of others. The second one is an expensive path where you make your own mistakes and learn from there. These apply in the field of investment as well. However, there is a lot of money which is at stake here. Therefore the best strategy would be to go with the smart path. Let’s look at the list of 10 common mistakes which are often made by investors.
Mixing Past with Present:
Deciding to invest based on the fact that a stock has given excellent returns during the last few years should not be the only criterion. The future returns may vary; your holding period may vary. Therefore the stock might not replicate the previous average returns.
Importance of Investment Plan:
It is often taught that making a plan helps you in identifying errors and mistakes. The same rule applies in the case of investment. If you lay down a clear plan it will help you in minimizing the risk and reach your goal with less difficulty.
Diversification:
It means investing your money in different investment tools. If you put all your money in one basket the result would either be catastrophic or it will be a godsend. In either case, you are leaving it to chance. Do not play this kind of gamble.
Tax saving:
It is a good thing to plan out for taxes. However, focusing all your energy on tax consequences is not a healthy choice. It would become insignificant when compared to a decent investment plan.
Too much or too little risk:
This puts you at a disadvantage. Taking too much risk opens the gate to panic. Taking too little risk might result in lower-than-expected investment growth.
Media and rumors:
It is one thing to remain updated. However, reacting to it without understanding the entire picture would be a mistake.
Timing:
It is a crucial aspect when it comes to trading. Investors tend to buy at higher prices and sell at lower ones. Ignore this and take the baby steps approach. Buy a little every week.
Research:
Do not invest based on people’s ideas. Do your due diligence before making the final decision. Everyone has a different reason for investing.
Expenses:
Do not end up paying high brokerage fees. If you are looking for an advisor find someone who meets your requirements and not someone who is a hotshot.
Emotions:
Don’t let your emotions come in the way of investing. If you are going through an emotional rollercoaster, staying away from investing would be a good idea.
Good Investment Tools You Should Know About
Most investors want to get on their share market app and make a quick return on their investments. They also want sky-high returns with a minimum risk of losing capital. This is why most investors look for top investment plans where they can double their money easily. However, a combination that provides high return with low-risk does not exist. In reality, returns and risks vary directly. It means the higher the returns, the higher the risk, and vice-versa. While investing, you have to match your risk profile with the associated risk of the product. Now, investing in the stock market needs detailed analysis and understanding. To help you on this journey, the following tools will aid you in making better decisions.
Share Market App:
You need the best stock market app for yourself. A good application will help you make informed decisions in real time. It will also keep you informed of all the ongoing of the market. With the help of a good app, you will be able to make seamless investments.
Stock Charts:
With the help of stock charts, the investor analyzing has the power to make other quality financial charts. You can use various platforms to create and use these charts. These charts can be used to track a broader market or an individual stock. The charts also help in finding stocks that fit an investor’s specific criteria.
Good Broker:
Believe it or not, a good broker can also be a good tool when it comes to investing. It offers various services and facilities. First of all, you need a broker Investor to invest in the stock market. Second, you can always seek advice if you are stuck in some trade. Hence, you can say it is a one-stop solution in short.
Simple Moving Averages:
Moving averages are one of the main indicators of technical tools. It is available for different periods like 20 days, 50 days, etc. It is used by analysts to make buying or selling decisions. The tool is used to smooth price data and
technical indicators. The longer the period of the moving average, the better the results.
Relative Strength Index:
This tool is a momentum indicator. It measures the magnitude of the latest price changes to assess oversold or over-purchased conditions in the price of a stock. The index is read on a range of 0 to 100. Over 70 it is considered as over-purchased and oversold below 30. The levels can be customized to better fit security.
