INVESTING DONT’S FOR NEWBIES

The thought of ramping up your wealth through investments may sound appealing but if you are a beginner in this field, it is crucial to remember that despite the satisfying yields it can give you, it can also expose you to a number of risks that may cause you to lose all your funds. To avoid this, here are the ten mistakes you should keep in mind.

Careless decisions Investing is different from gambling wherein you trust your instincts as you make your move. It requires thorough consideration and not merely picking out whichever stock seems appealing to you during the time.

Lack of research If you are interested in a certain area, familiarize yourselves with all the necessary aspects first, such as details of a product and the company’s business plans to make sure you know what you are getting yourself into.

Unspecified timeframe Do not invest if unsure of your time horizon, since this is how you determine whether you need a long-term investment such as education or a short-term one.

Forgetting the pros and cons If you like to fantasize about returns, make sure to mull over potential risks as well. Do not be blinded by what you may possibly get and allow it to obstruct the downsides of an investment.

Neglecting risk tolerance If you do not recognize your weakness before taking action, your hard-earned money might end up going to waste. For example, if you cannot handle too much volatility and constantly fluctuating market conditions, it is best to go for established firms instead of startups.

Absence of diversification Like what many say, putting all your eggs in a single basket is not a good idea. Diversifying your holdings will soften the blow of declines it protects against extreme price hikes.

Being fooled by affordability Obtaining a stock at a low price does not necessarily mean it is a good investment since the standard remains within the value. An expensive one may be worth the pay at times and a cheaper one can be a terrible choice as well.

Disregarding taxes Remember the tax consequences before investing by looking at the amount of your return after the needed adjustments as you will only get breaks on certain stocks like municipal bonds.

Underestimating fees Avoid compensating for more than you need when it comes to trading and brokerage fees or look at other, less-pricey options to save cash.

Going with the flow Do not act based on presumptions that you cannot earn by having a keen eye on good investments. Remember, although you might be getting the same information as everyone, not all investors do their homeworks and are short on proper research.