Trading in the Equity market is not a piece of cake! It is possible to make mistakes while dealing with stocks and equity. But, how could you possibly avoid these mistakes? Let’s understand the impact of these defaults on your financial base, and some of the most common ways to avoid being a sufferer!
Source: The Motley Fool
Significance of Stock Markets
Stock markets and shares are now prime investment options for Indian citizens as well as NRIs (Non-Resident Indians).
Hypothesizing on share markets and their developments isn’t a very great idea and every shareholder must abstain from it. If you are an ‘investor’ in shares it is more possible that this isn’t your full-time job, and chances are you will be swept away with every increase and decrease in the stock markets. It is for this rationale that the mutual fund method is suggested for equity investments.
Major mistakes to avoid while investing in shares
1. Timing the Market
This is one of the monumental mistakes that almost every investor makes. The equitymarket or the stock markets do not wait for anyone. The ups and downs may occur due to an important political or international event, but other than confirming this, an investor can never be sure of how much they might increase or decrease.
To start your investing, start small. Choose those options that are fundamentally strong that perform consistently well over a period of years and months.
2. Following advice and tips
It would be a foolish decision to make should you follow the counsel of every trader or stock market broker. You must make sure you have all the facts before putting your money into that particular equity or share.
3. Borrowing for Investing
One of the worst mistakes that can be made is borrowing money to invest in a certain stock or share. In the chance that the market falls or that particular stock declines, the person will end up in a spiraling case of debt and be having to pay more than what he initially borrowed because of increasing interest rates.
4. Being a Know-It-All
It is absolutely great that if you had an opportunity to invest and the returns were plentiful. But just because you have invested correctly once, does not mean that the winning streak will continue. Again, it all depends on the market and the ups and downs.
5. Keeping a hold on flop shares
If you have been investing in shares for an extended period, you possibly know that eventually prices average out and you may be able to get a respectable return on your investment in direct equity. Nevertheless, this can result in holding onto to useless shares; a frequent mistake while investing in stock markets.