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:
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.
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.
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.
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.
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
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