Stock investment is not child’s play. You cannot go and buy a random stock on the market and hope to become a millionaire. It takes months of research to find the right stocks, followed by years of patience to let it grow to its full potential. If you ever need some initial capital for starting a business, simply talk to Heart Loans. If you want to start investing in the stock market, make sure you avoid these dumb mistakes that all newbies make.
Investing in their favorite company
Everyone has a brand or company they admire the most. It could be a clothing brand or a technology company whose products or services you use regularly. However, just because you like a certain company doesn’t mean you have to hold its stocks. The only advantage of this strategy is that you know that company more closely. You understand, as a customer, where it goes right and wrong. Also, you could be following news about the company which helps you in keeping track of their moves.
However, undue fondness of the company will make you lose money. Your strategy should be finding firms that have genuine value propositions and the ones that will sustain for decades. Even if you hate a brand and it has better chances to give great returns in the next 5 to 10 years, you should buy its stock.
Paying too many fees
Newbie investors have a hard time in finding out the right brokerage services, financial advisors, and investment platforms. Often, they may get caught up in popular schemes or large exchanges which are designed to service regular traders. Consequently, they pay higher fees and commissions for their trades. Their stocks must perform exceptionally well to write off the fees and still earn a good return that could beat inflation. A newbie investor is generally not experienced enough to handle his shares like this.
You need to work with your head and keep your heart aside when investing. It is vital to keep track of the market sentiment but never wise to work on fears and hype. If you make investments based on a rumor that spreads panic or undue excitement in the market, you will definitely lose. Here is one thing you need to understand- every stock, no matter how good, will fall. No stock can keep on rising forever. If you really want to see how trends develop, check how the stock has performed in the past one year. If you look at daily changes in the stock prices, you will most likely be disappointed.
Buying assets they don’t understand
You could end up buying oil stocks because the company looks strong in the trends but have zero knowledge how the oil industry works. To get more profits, you could end up investing all your money in options trade and lose everything within minutes. Never invest in a fund, stock or derivative that you don’t understand.
Whenever you start investing, make sure you avoid all these mistakes. This will help you in making stronger, more rewarding investments that will keep earning spectacular returns for you.
Author: Oliver Curtis
Hi there. I’m Oliver. I’m just a young boy from the outskirts of… Okay, that’s a lie, I’m not a young boy anymore, although I certainly feel that way at heart.