An investor needs to be careful and should take accurate measures to design his investment portfolio which should lead him to gain profits. Though an investor takes all measures by designing a good portfolio but sometimes as he is a normal human being and due to uncertainty in the stock markets some of his decisions prove to be wrong.
Most of the common mistakes which an investor makes during his investment can be listed as:
a) some investors do not follow any rules while doing their investment means they vaguely invest in stocks which can lead them into a big trouble. Investment in stock market is like a game and game without rules hold no meaning. So an investor should always decide a set of rules before playing the game of investment in stock market. Rules made in investment helps an investor to take illogical and emotional decisions.
b) Sometimes investor ignores to take into account taxes and fees which he will be charged while buying and selling of stocks is the second biggest mistake which an investor makes which will be counted as a loss if he sells the stock without taking into account this fee. An investor should not forget to add the brokerage fee also in order to calculate the right value of the stock.
c) The third mistake that an investor makes is when he mixes his investment with his trading activities. So in order to avoid confusions regarding investment an investor should know the clear difference between investment and trading of stocks.
d) An investor should be clear in his decisions regarding investment i.e. he should waiver his mind due to media or other sources because sometimes even the media people can make you take wrong decisions regarding investment.
e) Another mistake which an investor makes is that when he is allured by the huge profits made in stock market overnight, he tries to take more risk which can lead him to huge losses that too overnight. While risking his money an investor should be clear about all the risks regarding his money and do his investment carefully so that he should not repent in future.
f) An investor sometimes makes a mistake by making his choices adamant regarding his investment portfolio which can be a bad sign for him. An investor should be flexible in changing his investment portfolio with respect to time.
g) An investment which can make you earn huge profits can also lead you to suffer from huge losses. So an investor should not forget to keep this in mind. Generally an investor makes a mistake by just keeping profits in his mind.
h) Another common mistake which an investor makes is that he fails to do the proper valuation of the stocks in which he is going to invest which will be a wrong decision and a biggest mistake for his monetary investment done in stock market.
i) Another mistake an investor makes is that sometimes he totally becomes dependent on the tips given by different news channels and trading companies. This is completely wrong on investor’s part as he himself should analyze the annual and quarterly reports of the stock in which he is going to invest his money.
j) An investor sometimes confines his investment in the stock market to a particular time which is a mistake on his part as in stock market no one can give you assurance that the particular stock will rise in particular pre- defined time period.
k) One of the most common mistakes an investor makes is that an investor rather than allocating his money in different stocks, invest in one particular stock which is a bad sign for an investor.
l) Sometimes an investor enters the stock market by doing investment but they forget to make and execute the exit plan which will tell him that at what target he will sell that particular stock. So, is an investor fails to make an investment plan he is into big trouble and won’t be able to book profits on time.
In order to conclude this topic, we can say that an investor should try to avoid the above mentioned mistakes in order to have gainful investment.
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