Avoid common investment mistakes
Avoid common investment mistakes. We have put together a simple but not exhaustive list. Do you have other suggestions on what should be added?
1. create an investment plan.
Without a plan, your investments will be selected at random with a shot from hip style. Investors should decide what type of companies they want to own – growth companies, cyclical companies or speculative ones. You need to decide whether you want current income or capital gains. Don’t abandon your plan when there is a bull or bear market.
2. take the time to get informed.
The most common form of investment mistake is forgetting to get information about a company’s finances. It is all too common for investors to buy shares without even checking what the company is doing or what the future might be for that type of product.
3. check the quality of your advice.
Many investors do not check their broker or advisor’s investment track record before investing with them. They rarely check their educational or professional background.
4. Do not invest money that should be set aside for other uses.
People invest money that should be set aside for emergencies or for other early expenses. If you invest with money that should have been set aside for emergencies, you may have to sell at a loss.
5. Be careful not to be optimistic at the top and pessimistic at the bottom.
Optimism and bullishness are contagious, as are pessimism and bearishness. Thus, even when the market is high, people go straight to buying. They do so because everyone seems to be buying. They assume that nothing will change and that the bull market will continue. Conversely, people become increasingly pessimistic when the market drops. Often they hit the bottom when stocks are at their cheapest. That could be when you should be buying.
6. avoid buying on the basis of tips and rumors.
It is rare for people to receive inside information that has any value to a public company. Even if you do, it is usually old and out of date. No matter how hot a tip you hear, many people knew it before you did.
7. Don’t get sentimental about a stock.
Some investors get attached to their shares. They hold their shares long after the profit potential is gone. The second type of mistake is ignoring the fact that you were wrong when you bought a stock.
8. avoid buying stamp stocks assuming they offer the best returns.
A stamp stock may seem like a bargain but not because it is a low-priced stock. The price of a share is what the marketplace thinks the company is worth divided by the number of shares outstanding. Shares that have a low price are perceived by the market to have little value. Point.
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