Explore various investment option before making any actual investment. Given below are five common mistakes that investors often commit.
New Delhi: While making an investment, people look out for the options which can increase their wealth. Often, people start investing without any knowledge, experience or research work. According to experts, one should start investing from the first day of the job. This gives more time to create a larger corpus.
Therefore, it is important to explore various investment option before making any actual investment. However, one should remember that there are no sure bets in the world of investing. Committing mistakes is also a learning experience. Given below are five common mistakes that investors often commit.
1. Determine your risk appetite. People often invest the money which they can not afford to risk. Before investing, if you know what amount of money you can risk then it won’t cost you more. Alternatively, this way you will be emotionally prepared if you lose money.
2. Try to align your investment decisions with your financial goals. Since all the investments do not generate identical returns, therefore, if you have their financial goals clearly mapped out you can choose your investment instrument carefully. If a person doesn’t know that how much he needs to invest for how long in order to achieve his or her financial goal, he or she may not be able to choose an appropriate investment option.
3. A common mistake people commit is they narrow their investment portfolio. Narrowing the investment portfolio means you will be more vulnerable to market volatility and might end up losing money. Therefore, it is important to diversify the portfolio by investing in a variety of assets like mutual funds, equity stocks, real estate etc.
4. When people invest in the stock market, they expect shares to fetch returns immediately. Before making an investment in the stock market, you should learn the basic of the stock market. In fact, one can take financial advisors assistance as well before investing. Being an investor you should learn to assess the source of information you seek while trading.
5. People invest and forget. They fail to understand this fact that it is important to review investments. Specifically, in the case of mutual funds, stock market investment, real estate, recurring deposits, various government savings schemes. Therefore, it is always advisable to review your investments once or twice a year to check if it is proceeding in the direction set by you.