10 Common Financial Errors Made by Stock Investors:

Common mistakes to be avoided:

People when make investments; they tend to make mistakes that can be avoided. In case you have been through such things then nothing to worry. It is because you will not be alone in this regards. Some of the highest profile investors including Warren Buffet have openly shared their investment faux pass.

If they have made mistakes then thinking about not to make investment is something that should not be in mind. Though we hear the statement every now and then; answer must be that it should not be at all.

Seeking professional help before making investment is what should be done before hand. Having this in my mind; there are several investment errors that can be avoided in order to build the wealth in a serious manner.

Try to time the market: When it is about making investments; typical intention is to multiply the wealth or create the income for wealth. The best way to get it do is to invest on continuous manner.

History has taught that financial markets have upward trajectory. It is for this reason that it is all about the time in the market and not timing the market. It has led several financial success in investors.

Little diversification: One of the pillars of successful investment is to make sure that all the eggs are not places in one basket. Proper diversification means to have a range of assets from several sectors, geographical regions and classes where returns are independent of each other. It is also key to keep an eye on the scams correlating with each other related to styles.

Keeping cash: Reserves of cash with oneself is crucial. It can be needed for so called emergency needs. This offers financial security blanket. On the other hand, having ready to use funds is an opportunity or positive trend where one would like to capitalize.

Lack of objectivity: Decisions that are rooted in emotions are actually noble in life. However, with investment; the same can be dangerous. There should not be any place for undue loyalty, adopting a herd mentality or keeping un-appearances.

Lack of patience: Slow and steady wins the race; this is something that we have been hearing since our childhood. This rule is applicable everywhere. Be it in school, at the gym, or in career. Why it should be considered while making investments. This is why it is suggested to keep the expectations near to reality in regards to time, length, and growth encountering the stock.

Investment turnover: Jumping in and out of the positions should only be done when you are an institutional investor with the benefit of lowered transaction cost, commission rates, and much more. Last but not the least, short term taxes as well as the opportunity cost of missing the long term gains is also there.   

It should always be kept in mind that mistakes are indeed inevitable part of everyone’s life. However, it is believed that when we avoid errors; we must be well positioned to mitigate the investment risks and make best use of the investment opportunities.           

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