By financen | May 2, 2009 - 5:15 pm - Posted in Investing

Investing is an art and like all other skills, it takes some time to develop it. When most of the investors are nurturing this art, they often make fatal mistakes that later costs them a lot of money.

Here are the most common mistakes that you should avoid while investing:

1) Following the latest fad: It is not necessary that you will have to buy at the same time when others are buying. You will simply get the stock when its price is right at the top and just before it begins to drop down.

2) Giving up too easily: The market will always go through a lot of fluctuations. Many people abandon their investment plan, if they see minor fluctuations happening in the market. If you are considering to do an investment, you need to do it for the long term. If you are doing a short term investment, the market will always go through a lot of variations and this will simply cause you unnecessary anxiety.

3) Not diversifying: If you are having just one stock, you don’t need to put a lot of trust on it. It is a good idea to spread your investments in different sectors. This way, if one of the stock is not doing well, then you can rely on other stock invested in other sectors so that the losses can be covered.

4) Investing without a plan: Do not do any kind of investment without a solid plan. You need to be well aware of the kind of risks and returns involved in the investment done.

5) Being in a hurry to make profit: Don’t be in a hurry to make a profit because greed is a certain recipe for disaster. Don’t get swayed by get quick rich schemes and options that promise high returns. You should always prefer slow and steady profits from your investments.

6) While doing an investment, make sure that you are ready to put that amount of money only that you can afford to lose. Many people often make the common mistake of borrowing money from their friends or relatives or sell their house or car to act on the latest fad. Using borrowed money can lead to serious trouble if your investments is not giving you a good return. Don’t make rash decisions thinking in the short term otherwise you will regret in future. Star small, build up your capital and then gradually raise the amount to invest further.

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