Top investment mistakes you should avoid
Investment is a lucrative option as you can earn is quite a considerable amount of wealth. The leverage in the investment market is quite high and you can reap major profits. However, the investment market is fraught with uncertainties. Hence you should be careful while making investments.
You shouldn’t make a single mistake while investing money as it can lead to the serious loss. Thus, you should be aware of some crucial investment mistakes.
Here are the top 10 mistakes that you should avoid while investing your hard-earned money.
Assuming that investment is an easy task
This is one of the most common mistakes that people make. You should remember that just because it is highly rewarding, it is not easy. You should have proper learning and knowledge of how to operate in the investment market to perform well. Do not jump to decisions and practice on a demo account for some time before you venture into the real market.
Using credit cards to buy investments
You shouldn’t buy stock or bonds using your credit cards. Remember, you have to repay the credit card bills in full and within time. Otherwise, you will fall in to credit card debt. If you buy investments with your credit cards and don’t repay the bills on time, then you will start accumulating highest interest rate. So, there is no point in earning the profit on your investment and losing money on the highest interest credit card debt.
Also, most of the investment platforms don’t accept credit cards for buying investments. So, it is recommended to save a certain amount of money before planning for investments.
Predicting trends in the investment market
Another mistake that you should avoid is predicting the investment market just because you have done enough reading and research on it. Prediction of investment market needs consideration of too many actual factors. It is safer for you if you keep a lookout for when the positive market fluctuations are starting and utilize the trend to your utmost benefit.
Making decisions based on emotions
You need to be properly disciplined to be successful in the investment market. You need to do hard work o get profit in the investment market. There is no place for acting on emotions or impulse here.
Not acquiring knowledge about investment
Like the other earning opportunities, the risk of making the investment is also much higher. The investment market has the potential to make or break the fortunes of any investor. Thus, to achieve success in the investment market, first of all, you should acquire knowledge about how the market functions. Apart from this, you should have a proper investment strategy in place to achieve success in this profession.
Not investing in various asset classes
One old adage goes like that, “don’t put all the eggs in a single basket’. This even holds good in case of investments. In other words, it is to say that you must not invest all your money in a single stock or in the stocks of a particular sector. In case, that particular stock or that sector fares poorly, chances are there that you may lose a huge amount of money very quickly. So, it is recommended that you must invest your money into bonds and different types of stocks.
Following other’s footprints
It is common psychology to follow what others are doing. But, in stock investment, it is recommended that you should not follow others blindly. Instead, you must do the fundamental and technical analysis on stock on your own and judge the potentiality of a particular stock. Thereafter, depending on your own analysis, you need to decide whether to buy, sell or hold a particular stock.
Waiting for events to turn
You should take care not to wait for events to become favorable if you start suffering losses. If the rates in the Forex market start declining, you should cut losses by selling immediately instead of holding on to your Forex lots hoping the price will rise again. Logically, it may seem to you that the price will rise at one point of time, but by then you may have suffered huge losses.
Not investing in the stock market
It has been proved time and again that over the long run, return on stock investments outweighs all other forms of investment. Given this historical trend, it would be wise to take stock market investments to achieve long term goals.
Leaving the steady job before gaining profit in investment
Investment can be your side business. When it clicks, you usually have a good income flow. Don’t try to leave your daily job as you have started investing money.
This can put you in a lot of trouble. If you lose money, that can make you fall into debts. But if you get very high returns after years of investing in it, you can manage to leave your daily job to fully concentrate on it.
Investment is a virtue. The earlier you start investing, the better it is for you. You can invest your hard earned income into various asset classes such as bonds, stocks etc. But, when it comes to investment, you should follow a clear strategy. Otherwise, you may not be able to gain profit. Thus, you should seek advice from an experienced investment expert to get a strategy before investing money.
This is a guest post by Linda Richardson.