Investing is definitely the right thing to do and something you should be doing if you want to see your money grow. However, the more important part is investing in the right places. There’s only one thing worse than not investing and that’s not investing wisely enough. If you don’t get the basics right, you might end up with the biggest regret of your life. We’re pretty sure that you won’t want that, right?
Irrespective of whether you’re a beginner or an expert, there is a set of guidelines that you need to follow to invest right. Here are seven of the worst investing mistakes that you need to avoid:
- Lack of planning
Lack of proper planning can pretty much screw up everything. If you don’t plan well enough, your investments can backfire too! Before hurriedly choosing random investment plans, it’s better to keep a few things in mind. These include—your short-term and long-term financial goals (if you don’t have these already, now’s a good time to start) and level of risks that you’re willing to take.
- Not rebalancing your portfolio
You need to watch the market closely and keep a close tab on all stocks in your portfolio. You constantly need to rebalance your portfolio by getting rid of low-performing stocks and adding the ones doing well. Although it involves a lot of effort, it can pay off pretty well.
Additional Reading: What To Remember When Investing In Mutual Funds
- Not stepping out of your comfort zone
If you don’t step out of your comfort zone, you’ll never be able to earn more. And if you don’t make efforts to increase your income, you’ll never be able to invest more. If you feel like starting your own business, do it while you’re young and capable of handling more risk. If you plan it all right, you might be the next business sensation. Who knows? You have enough time to step out of your comfort zone and look for better opportunities and if you don’t do it now, you’ll never be able to do it later.
- Borrowing more than you can repay
We all borrow money at some point or the other. Sometimes you’re not left with any other option but to ask your friends or relatives for money or take a Personal Loan. Borrowing money is okay, not repaying in time isn’t. If you miss out on loan instalments, a bank can declare you a defaulter and if you’ve borrowed money from your relatives or friends, you’ll just end up straining your bond with them. Whenever you borrow – be it a Home Loan, Car Loan, any other kind of loan or even a Credit Card, keep your financial situation in mind.
- Buying policies based on word of mouth
We often tend to trust our friends and relatives blindly when it comes to making an investment decision. People often tend to thrust their opinions on you. It might even work in other cases, but when it comes to your money, you just can’t afford to take a chance. Before you invest in ULIPs, endowment products and other insurance policies, ensure that you’re on the right track.
Additional Reading: 10 Things You Must Ask Your Investment Banker
- Investing without proper research
Don’t invest in any policy without conducting proper research or consulting people who’ve actually bought it before you. Having a trustworthy source is essential, especially in matters like investments that involve your hard-earned money. Study the market and check the trends before choosing any investment plan.
- Not saving enough
Savings always come in handy. Be it for an emergency situation or for investing somewhere, unless you have enough money saved, you’ve a reason to worry. Don’t wait for your income to increase before starting saving. Be wise and start early. Even if you start by saving small amounts, they will pile up and eventually benefit you! Small steps will take you a long way – for example, open a Fixed Deposit and start a Recurring Deposit to build your savings.
Check Out: Open A Savings Account Online In Minutes
- Being too greedy
Being greedy has never helped anyone. Investing in the share market is great, but you also need to control your urge to invest everywhere. If you think that trading too much is going to be beneficial for you, you’re wrong! Greed often lands you in trouble. Think twice before investing too much in the stock market.
- Relying only on the media for tips
While it’s good to keep yourself updated about the market situation, you can’t totally depend on the media for investment tips. Your investments should depend on your financial situation and short-term and long-term goals instead of depending on what some media channel has to say.
Additional Reading: Your First Steps To Investing In The Stock Market
Avoiding all these mistakes can help you do better with your investments. Once you’re all done with getting the investment basics right, we’re here to help you with anything else related to finance. Just ask in the comments section below!
Thanks for the article. I learnt something valuable information today in journey of online investment.
Hi Tanooja, Happy to help. Please keep reading our blog for more. Cheers, Team BankBazaar