Investing is an exciting experience. But it can also overwhelm people, especially those who are starting afresh. By their very nature, stock markets go up and down – disciplined investors understand this, and develop strategies to reduce their risks during market lows (as is these days), and to increase their returns in the bull markets.
If you would like to get sustained, long-term returns from the market, please make sure that you are avoiding the following, common investing mistakes:
Start managing your finances early in life. Investing at an early age gives the power of compounding work to make your money grow. One who arrives first has the best chance of success.
Do not keep all your eggs in a single basket. Diversification of assets is essential for minimizing risk. Your investment basket should have a mix of debt and equity classes based on your goals and risk appetite. It is also necessary to monitor your portfolio regularly and to modify your investments subject to market behavior or personal circumstances.
Money has an extreme attachment to most of us. One thing every investor does occasionally is to let their emotions override the logic. Keep the feelings aside, at least as much as you can, and stick to the calculations with reason while making investments for the best returns.
A variety of trends and cycles indeed impact markets but going after these trends often backfires, resulting in loss of face, and money. Trying to time these trends is futile for retail investors. Instead, pick the asset classes for the long term for sustainable growth.
Investing money borrowed from banks, friends, or credit cards is a staircase to a financial disaster. Investing borrowed money initially is tempting, but it is a risky option that most often leads to financial stress. Incidents like steep market falls may wipe off your investments, leaving you with a pile of loans or debts at high interest in the short term.
Keep your expectations realistic subject to the timeline. Making investments with an expectation to multiply overnight is a classic recipe for disaster. A slow and calculated approach yields greater returns in the long run.
Do not mix up insurance with your investments. The key motive of an insurance policy is to ensure income, or safety net, for you or your family in the event of unforeseen incidents like an accident or an untimely demise. An insurance policy must be part of your fundamental financial planning, but these policies neither generate optimal returns nor provide enough financial cover.
Now that you know which mistakes to avoid while investing do not let the market fluctuations scare you away. Always analyze the markets and start investing wisely based on your financial goals.
Investments are like long-term relationships and having an investment advisor like Savart can keep you informed about markets and provide you with the best advice based on your needs and goals. Download the Savart App.
Individual investors engage in stock market activity for a variety of reasons, e.g., long-term gains, short-term gratification, experiencing daily highs/lows, learning, applying intellectual strategies, etc. Their approaches to achieving these objectives can be broadly classified as active or passive in terms of the time spent analyzing the markets and their frequency of transactions. Let’s understand […]
7 Common Investing Mistakes That Can Reduce Your Returns from the Market Investing is an exciting experience. But it can also overwhelm people, especially those who are starting afresh. By their very nature, stock markets go up and down – disciplined investors understand this, and develop strategies to reduce their risks during market lows (as […]
The Tap Is Being Turned Off Understanding the impact of higher interest rates and lower liquidity on stock market prices Over the last few days, the Indian rupee has hit a lifetime low of 78.20 against the US dollar while oil prices remained at their elevated levels. Additionally, the US reported a 40-year high inflation […]