The Buyt Desk
If the investment is in your mind and you are seeking quick guidance, here are ten common investment mistakes that people generally commit, warns experts.
Unplanned Investment – There are investors who invest money without any plan. To them, investment means either buying insurance or mutual funds. But if these investments have been made without planning, it is nothing more than a clutter of investment products.
Not Giving Time for Investment to Grow – The most important thing in investment is time. To get the desired return out of the money you have invested, it is important that you give it the needed time to grow. The investor’s contrarian to experts takes hasty decisions and end up taking lots of risks.
Checking Performance – The new investors often do not check the performance of the product they are investing in, which can be risky in the long term. If you prefer any financial product, such as mutual fund, shares, or any other, check its track record both recent and 5-10 year performance.
Watching The Market Activity – One of the common mistakes new investors do is they don’t follow the activity of the market presuming that the market is complex. But constant monitoring of the market movement gives you insight and helps in making the right decision.
Mixing Insurance With Investment – Each financial product available in the market has its distinct worth and fulfills the need categorically. No two investments should be mixed together, therefore. For E.g. Insurance is for catering to present needs, and the mutual fund/share market is to gain long-term capital. If something happens to the earning member of the family, insurance will give the required liquidity to the family. Insurance is the fallback option for unforeseen circumstances. For goals like children’s education and marriage you don’t need an insurance plan but an investment plan. Do not invest in insurance products for serving your long-term goal. Insurance has a specified purpose and it should be bought to give your family a helping hand. Insurance can’t replace investment and vice versa.
Following Others – Investment is like the game of chess where players decide their moves according to their respective situations in the game. Therefore, instead of following others, invest according to your needs and the fund available to you.
Churning Your Investment – Do not change your investment portfolio unless you have confidence in your move. Many first-time investors change their portfolios without planning and evaluating their consequences. It might increase your taxation charges.
Over-ambitious With Investment – Return on an investment depends on the market economic conditions. E.g. during high inflation, FDs give a higher rate of interest when inflation is high and vice-versa. Similarly, the products that claim high returns may turn out loss-making during the economic slowdown.
Correct Mistakes – Long-term investment does not mean you forget about your investment. On the contrary, keep tracking the performance of the product you have invested in. At any point in time if you feel you made a wrong investment, never think twice about correcting your mistake.
Not Talking About Investment Plans – Don’t shy in discussing your investment plan and checking what others are doing.
These are a few common mistakes newbies in the field commit and face losses. If you don’t want to experience the same thing as they have done, avoid these common investment mistakes. Further, financial experts are also there to help you. They are far more knowledgeable than you and can provide you with the right guidance.
