Articles

7 Common Mistakes That a First Time Investor Makes

by Money in Minutes Money in Minutes

Making investments is not an easy game; many enter with big hopes in their mind and heart and often find those hopes crushed and broken after a span of time. That's the harsh reality of the investment arena. Exercising caution and striving to understand the product before pumping in the money is the key to safeguard yourself from being broken in the end. When they lose everything because of bad investments made by them, they resort to payday cash loans for meeting the emergency expenses.

Instead of picking investment products and stocks like a buffet meal, you need to be aware of the repercussions of the same. We tell you the 7 common mistakes that the first time investors make so that you can save yourself from committing the same. Have a look, take a notepad and jot down the valuable lessons:

1. Jumping without studying

The basics of the investment theory are indeed simple, you are required to buy at low and sell at high, but you are required to know what this 'low' and 'high' mean in reality. What may be high for the seller, will indeed be low for the buyer in a transaction. Hence, one can draw different conclusions from the same piece of information. Thus, it is of great importance to study up the information before jumping into the investment or loan product, be it the quick payday loan. Get an understanding how the calculations are done and what are the major strengths and weaknesses of the product. 

2.  Investing without a plan

The raw mistake most of the first time investors make is making an unplanned investment. If they have extra cash in hand, they invest in whichever the first instrument that comes to their attention without even understanding the importance of that instrument in their investment profile. Thus, make sure that the investment you make has a long-term positive impact on your financials as the investments are usually done for a short period of time. A series of wrong investment decisions may even give you a bad credit score, in the long run, leaving you no option but to only avail the payday loans no credit check. 

3Not thinking along the lines of 'Risk' Vs 'Rewards'

Knowing your risk appetite is the foremost thing an investor should do. The first time investors feel so excited about making investments that they tend to invest in riskier instruments which carry a way too high-risk potential than their appetite can handle. Afterwards, when the riskier instruments decline in the value, they get the panic attack and tend to sell out the instruments. Thus, taking a considered view of the risk as well as a reward is of great importance, so that the right type of instruments can be adopted and the need for incurring the cash loans can be avoided. 

4. Investing emergency funds

It is seen that the first time investors end up investing their emergency funds which should be kept as a cushion and thus lack funds for making their urgent requirements in near term. This is when they run to payday loans online as making those urgent expenses become the need of the hour. The thumb rule of investment is to invest only those funds which can be kept aside for a period of a minimum 5 years because the market is driven by long-run growth in earnings. 

5. Undiversified investments

You must have heard the adage, 'Don't put all your eggs in one basket'. Well, that adage suits the market to the T. Diversification is the only means by which you can avoid your overexposure to any one of the investments. Having a diversified portfolio can save you from incurring big losses if one of the investments slips off the track. This way you can also be protected against the extreme volatility in the movement of the price of any one of the investment and you will be saved from taking the small cash loan.

6. Aggressive approach

The first time investors are often desirous of getting the maximum returns from the investments made and thus are aggressive in their approach. You will invest all your savings and will take the maximum risk. The mutual funds will appeal you the most, but they do carry risk. The returns may be luring you, but it is advisable to go slow and not invest all the savings into risky instruments because if you do so you will have to avail the same day payday loans for meeting your expenses.

7. Being too risk-averse

Being on the extremes is always bad, be it too risk aggressive or too risk-averse. The no risk return is only the Fixed Deposit funds maintained with Banks. But the return is also low in that case. Try a little risk and get amazing returns.

The Bottom Line

Investment is an art and experience is the best way to learn it. But, a little cautious self and understanding can lay the foundation of valuable learning and can also save you from making bad investments and landing up in the soup of fast cash loans


Sponsor Ads


About Money in Minutes Advanced   Money in Minutes

47 connections, 0 recommendations, 114 honor points.
Joined APSense since, August 21st, 2017, From New Delhi, India.

Created on Nov 7th 2017 05:36. Viewed 910 times.

Comments

No comment, be the first to comment.
Please sign in before you comment.