Some Mistakes That Investors Should Avoid
Investing is a zero sum game.
For every winner there is a loser, which is what keeps the market efficient.
Knowing this, it is possible to develop an edge in order to win more than you lose.
Mistake #1 - Playing Without Rules No matter what you invest in you must create and stick to personal investing rules.
It doesn't matter if you invest in real estate, currency, stocks or options, before you begin you must create strict strategic rules that you will hold yourself accountable to.
Mistake #2 - Lack of planning and strategy Lack of a proper plan is the biggest mistake made by novice investors.
Finding a house after forming a proper investment strategy is the right way instead of looking for a house to fit the plan.
Mistake #3 - Ignoring Taxes and Fees Investors often get excited about the potential income an investment can make and forget to consider fees and tax implications that can diminish their profits.
Mistake #4 - Taking Too Much Risk with Trading People who are not investors often think investors are jobs that can generate money quickly.
They were wrong; these people are day traders who play markets for a living.
People who are inexperienced in this field can lose one million dollars in instant.
Mistake #5 - Letting the Media Influence Decisions The stock market is partially driven by emotion.
Many investors would say in the short-term the market is entirely driven by investor psychology.
People hear a stock tip about an upcoming earnings report, and they race to get in before everyone else does.
However, the media loves to drive this emotion.
Mistake #6 - Denying Defeat Nobody wins all of the time, and admitting that you were wrong can be a tough thing to do.
How you decide when enough is enough is up to you.
There is no perfect answer as to when to sell a losing stock.
Some financial planners recommend a loss of 10% in value; others use a dollar amount or a percentage of total capital.
Mistake #7 - Do not put your eggs in one basket As an investor, you do not put all your money in one portfolio.
If the portfolio is lost, you lose all the money.
For every winner there is a loser, which is what keeps the market efficient.
Knowing this, it is possible to develop an edge in order to win more than you lose.
Mistake #1 - Playing Without Rules No matter what you invest in you must create and stick to personal investing rules.
It doesn't matter if you invest in real estate, currency, stocks or options, before you begin you must create strict strategic rules that you will hold yourself accountable to.
Mistake #2 - Lack of planning and strategy Lack of a proper plan is the biggest mistake made by novice investors.
Finding a house after forming a proper investment strategy is the right way instead of looking for a house to fit the plan.
Mistake #3 - Ignoring Taxes and Fees Investors often get excited about the potential income an investment can make and forget to consider fees and tax implications that can diminish their profits.
Mistake #4 - Taking Too Much Risk with Trading People who are not investors often think investors are jobs that can generate money quickly.
They were wrong; these people are day traders who play markets for a living.
People who are inexperienced in this field can lose one million dollars in instant.
Mistake #5 - Letting the Media Influence Decisions The stock market is partially driven by emotion.
Many investors would say in the short-term the market is entirely driven by investor psychology.
People hear a stock tip about an upcoming earnings report, and they race to get in before everyone else does.
However, the media loves to drive this emotion.
Mistake #6 - Denying Defeat Nobody wins all of the time, and admitting that you were wrong can be a tough thing to do.
How you decide when enough is enough is up to you.
There is no perfect answer as to when to sell a losing stock.
Some financial planners recommend a loss of 10% in value; others use a dollar amount or a percentage of total capital.
Mistake #7 - Do not put your eggs in one basket As an investor, you do not put all your money in one portfolio.
If the portfolio is lost, you lose all the money.
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