Three common mistakes investors make

We all make mistakes and more so as an investor. Even Warren Buffett and Rakesh make them. It is a given and we cannot do away with it while investing. What we can do is minimize their size and number and to learn from these mistakes and do not repeat those avoidable mistakes.

The Panicked Seller

There were cases in the year 2008 when investors were looking at their portfolio sinking. Many portfolios were down by more than 50 percent, however, very few had the courage and patience to wait. Most of them would have liquidated their position when their portfolio was down by 20-30 percent only to find that within a couple of year returns from their holding would have returned to normal.

Therefore, when you invest in equity or equity mutual fund, you will have to understand the risk involved while investing in equity. Hence investor should understand what they own and why they own it. This will help them while exiting from them.

The Derivative Gambler

There are investors who are compulsive traders. They participate in the options market, day trade stocks or commodities, or participate in other high-risk investment behaviors. It not all, most of these investors finally lose. There are only a handful of skilled investors in the options market and their number pales in comparison to the numbers of ordinary investors who get hooked on the thrill of trading gains.

In the recent history of the equity market, you would have observed various events such as NBFC crisis, Brexit, global financial crisis, the 2011 Standard & Poor’s downgrade of the US credit rating and so on. Throughout each of these periods, markets were dislocated when leveraged investors could not meet margin calls and suffered forced liquidation.

Hence, following the right risk management strategy is important while you trade, otherwise, it will impact other parts of your portfolio.

Over-Spenders

There are investors who count their chicken before they hatch. They have invested and expect an unrealistic return on their investment over the period. This makes them spend more than otherwise also some people spend more than what they invest and finally they are less prepared for any eventuality. Therefore, you should set realistic return assumptions while investment. Managing your money and emotions is the best investment you can make.

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StartupColleges Team

StartupColleges is associate degree info platform for entrepreneurs, startups, entrepreneurship, technology enthusiast, and company. we have a tendency to aim to empower entrepreneurs with the information to create a positive impact in overall school –driven startup scheme. Our objective is to make a dynamic and Impact setting which will facilitate to foster property and thriving entrepreneurship scheme on India.

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