9 Common Mistakes the Beginner Investors Make

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It is very appealing to grow your money through investments. However, as a beginner investor you must know that it’s not an easy task to go past some mistakes if you don’t know about them. Common Mistakes that a First Time Investor Makes can make him or her lose all the money. It can become much worse than before.

Here are some Common Mistakes that a First Time Investor Makes that must be avoided to stay sharp in the huge market of investment:

1. Investing and Gambling are Not Equal

When you are gambling, don’t confuse that with an investment. Don’t invest on a stock blindly, it equals to gambling.

2. Research is The Key

Always do thorough research, before you invest in an investment plan or project about the company and the plans they are offering. Through research you can understand about a product or instrument along with knowing if you are in right track.

3. Do Have a Time Horizon

When you are investing your money always have a time horizon in your mind and always have clear idea for which reason you are investing that money. Is it for short term or long term? Have clear answer to these questions.

4. Balance Risk and Return

The return you are expecting can come with a risk. Every attractive return in investments comes with a risk profile. You must look into it and know how much money you might lose if something goes wrong. Invest only that much which will not bother you much if you lose.

5. How Much Risk Can You Take

One of the biggest Common Mistakes that a First Time Investor Makes is that they don’t know how much tolerant they are to risks. There are different investment options for various levels of risk takers. Evaluate on which level you are in before you go on investing.

6. No Diversification

Never invest all your money on just one plan. Diversify your money to invest in various types of plans to avoid overexposure to a certain investment. Multiple investments portfolio can protect you if you lose money from one.

7. Avoid Getting Fooled By Low Prices

Low price doesn’t ensure the value of the investment is good. When it comes to getting return prospect, a high-priced stoke can offer some real value. Low-priced stoke can be a terrible mistake if it is just to allure you.

8. Remember the Tax

Before you start investing, you must keep in mind the tax consequences. There are some investments like the municipal bonds where you will get tax break. Always make sure to look out for what your return is going to be after the tax adjustment, before you jump to invest. Consider you tax bracket, investment time horizon and take the investment into account.

9. Never Ignore the Fees

Never pay more than it is required as brokerage fees or on trading. If you hold on to investment and don’t trade much frequently then you are going to save some money on the broker fees. Go around to find one genuine broker who doesn’t charge excessive fees and you get to keep much more return that generates from your investment.