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Common Mistakes Investors Must Avoid While Investing

Aug-03-2021Blog by – Mr. Dhruv AjmeraRead Time: 5 Min.Word Count: 656
672Common Mistakes Investors Must Avoid While Investing

Investing your money is not a child’s play and is often one of the reasons why many people refrain from getting into the brainwork. However, it is not as complicated as the assumption too. Being mindful about where you put your money and the ability to keep realistic expectations is the key. At the same time, being patient and giving your money time to grow is also essential. When the world came crashing down in the early months of 2020, the stock market saw one of the most common mistakes in stock trading among investors- they were hasty and made an impulsive decision of liquidating their portfolio. The market did crash, but it boomed soon after to break all records, and the investors who remained patient were able to get fruitful returns of their investments.

 

To avoid such common investor mistakes and become a smart investor, here are our top 5 mistakes one must avoid while stock trading and investing:


  1. Investing in the unknown

One of the criteria you must consider when investing in a company is ‘how well do you know the company’s business model’. The growing numbers might seem exciting but that isn’t a good enough reason to invest. Read about the business, how it works. If the industry segment is not among your interests, you are likely to not be able to forecast its growth potential. Take it from one of the most successful men in the world, Warren Buffet, who cautions people of such investor mistakes.


2.            Getting emotional with the company

Giving preference to a company for its growth and numbers is good until you aren’t able to see the red flags. Remember that you have invested your money and not yourself into the business. If you spot any discrepancies in the fundamentals of the company at any point, do consider selling the stock instead of holding on to it with hope. Having a ‘feeling’ and investing in stock on the basis of this intuition is also not a good reason to put your money at stake. Investments should be made with the power of statistics and intelligence.


3.            Focusing too much on predicting the market

Timing the market is a very difficult art that even stock market brokers at times aren’t able to do successfully. Instead of timing the market which is a common investor mistake, one must focus on the better allocation of their assets.


4.            Not being patient

Investing your hard-earned money is just 10% of making an investment. The other 90% is about having patience and giving the company time to grow. A smart investor must have the ability to look beyond the short-term hurdles and focus on the long-term potential.


5.            Waiting for a closure

When a stock loses, waiting for it to return to its initial price is a fool’s play. The right thing to do is to let go of the stock and invest your money in a different company. You will end up losing a lot of money in the waiting period which can instead be invested in a place where it can grow. A simple way to get over the dilemma of if you should wait or sell your stock is to ask yourself ‘would I have bought this stock in the current situation?’. If the answer is no, you know what the next step should be. 

 

With this, we wrap up the 5 most common investor mistakes observed in the stock market. You can always reach out to a stock market advisory for a smarter and well-planned approach for allotting your assets. A good stock market advisory with its hands in the game will know the risks you can undertake and will advise you in making informed decisions. You can also search for online investment advisory services in the current scenario for remote management of your assets. To know more about us and our investment advisory services, contact us today!

 

Also Read: How to invest in the stock market in India
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