Invest a fraction of your hard earned money in some good financial plan. But before you create your investment portfolio and enter this money world, make sure you don’t commit the following most common investment mistakes.
1. Investing Without Doing a Good Homework
Never sign up for an investment plan without researching about the plan, its pros and cons and the organization where you are planning to invest your money. A proper planning is very important before you make an investment. It’s always good to enter in some long-term investment plan with lesser amount of risk attached and which would help you make more profit. Avoid being a rapid investor and the tendency of frequently getting in and out of investment deals.
2. Not Calculating Your Liability
A good investor must always calculate his liabilities and others expenses attached to an investment plan. Before investing it is necessary to set your price and return targets according to your liabilities. As you are a newbie in the market, you cannot assume the perfect time to invest, so it’s better to lose a little chunk than making a huge lose. So don’t be overconfident about your portfolio. Assert only how much you have. Studies show that overconfident investors, especially the newbies, have a tendency of trading rapidly, as they think they have more knowledge than the person on the other side.
Also calculate the taxes related to your investments. If you are not good at calculating the taxes and fines then do seek help of a financial adviser. A adviser would not only help you to get acquainted with the various investment plans but also provide you with figures stating the exact return available with each plan. Spending time in choosing a good monetary plan is always better than the time spending to correct our mistakes.
3. Making an Off-Shore Investment
Many a times we come across shrewd businessmen who persuade us to invest in some fake business plan or in some real estate located off shore. Avoid such investment plans if you suspect the reliability of the plan and its return. Financial experts says it is seen in the market that investors in hope for a good return invest in a off-shore deals which have less regulations but higher probability of being dubious. In many cases investor suffer due to indulging themselves over a fraudulent investment plan without correctly verifying the authenticity of the company.
4. Becoming Impatient
Never attach your emotions with money and change your deals in accordance with your changing moods. Think wisely and don’t panic because you see too much of fluctuations in the market. If you chase time and try to deal with share based on the recent performance then don’t be surprised to see if it doesn’t work in your favour. Share markets are unpredictable. Always remember that the past performance is no indication of future performance. In order to judge how well your deal is? Ask yourself: would I prefer buying this investment plan again? And if your answer is, No, I wouldn’t then this is the time for discontinuing the investment plan. Review your past investment plan so that you don’t make the similar mistakes and move further with some other deals.
5. Following the Crowd
Your investment decision should be your personal choice. You must not follow the crowd or a heavy advertised investment plan. Your deal will give gains or incurs loss solely to you and your dependents. Your investment plan must be suitable to your individual goals. Broker often approaches you for the deals which will fetch them high commission but could be inappropriate to your investment goals. Think twice before making an irrational investment deal which has the combination of non-disclosed cost and uncertain return.
6. Ignorance
We often ignore the fine prints of the terms and conditions relating to an investment deal. Always remember that being ignorant will never prove to be bliss in a financial market. When you make decisions of investing your funds in a company’s share then don’t only take into consideration the yearly performance of the company and its short lived profit. Instead look into the company’s performance over the last four to five years and its average rate profit. Select a company which is transparent and honest instead of those which does extraordinary things to give extraordinary result.
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