Common Mistakes Made by Investors

Posted by Jade Anderson on July 29th, 2019

Investment is a common term in the modern financial world. All over the world, there are investors venturing into new and old markets. There are a ton of investment options to consider when investing. The question, however, is how do you tell if the investment will be profitable? Getting answers to this question may not be straightforward as there so many factors to look into. This said there are common mistakes made by investors which, when avoided, will place you at a better position in striking a good deal.

Purchasing Shares in a Business You Aren’t Familiar With

Trends give off a strong gravitational pull in influencing investment options. Many investors get pulled into lucrative looking deals without gathering adequate information about the deals. Say I’m looking for investors for my business. It is without saying that I will present my business as having lots of profitable potential compared to other businesses. This is where proper business analysis skills come in. You should analyse the business well enough to tell if you’re being led to a dead end. Remember, with every penny lost in investment, your investment power to venture into new markets reduces.

Placing Too Much Expectations on Stocks

Most investors have a lottery mindset. An example is when investors treat low stocks as lottery tickets. They invest a small amount of money and expecting to earn a fortune. This may sometimes prove to be profitable but when investing it is not the right mindset to have. Most often than not, these investments yield little returns. Therefore, you need to be realistic in investing. You need to know the market well and make the appropriate decisions in investing.

Lack of Diversity in Investment Criteria

Most investors tend to use one concept when investing. This can be difficult to recognize over a long period as one tends to deviate towards a specific investment concept. This is an investment comfort zone. It is understandable why many investors would do this. Some reasons for this is a fear of losing money in an investment. However, the downside to this is you could be downplaying your potential. To manoeuvre these uncharted territories, look into making small investments in other concepts and see how it goes. Also, look into how other investors do their market analysis to determine which concept to try.

Unreliable Sources of Information

This is really important in investment. Business is business; there so many so-called investment experts that will claim to have the know-how. They will present their opinions in the most professional way possible to earn from your audience.

One of the most important tasks you will have is filtering out unreliable sources of information. You should always apply scepticism when it comes to incorporating sources of information. This will save you lots of money and time over time in your investments.

Just because someone has a large following on social media does not guarantee that their information is credible. For, some of these people their following is their business. Dig deeper on these individuals, look into whether they practise the stuff they sell you.

Instead, consider coaching from professional investors like those at Learn to Trade. The mentors are experienced and can provide reliable sources that you can learn from.

Investing with Money You Can’t Afford To Lose

Investing should be approached with an open mind. Not to say that you should be pessimistic or doubtful, but, in investment, you need to be open to the possibility of losses. After you have done your market analysis and gathered all the relevant information, you got to take a reasonable risk. This means not exaggerating the potential of your investment and investing what you can afford to lose.

Most investors get carried away by the potential of their investments and place huge sums of money expecting a high return. If you can comfortably place this kind of investment and still be at a good standing, then go for it. However, if this kind of investment will put you out of the game, do not engage.