Some of you may have learned about investing. It might be so satisfying, but some people make mistakes that may harm their investment.
To avoid those things, here are 4 common investing mistakes.
1. Not Understanding the Investment
One of the world’s most successful investors, Warren Buffett, cautions against investing in businesses you don’t understand. This means that you should not be buying stock in companies if you don’t understand the business models.
If you do invest in individual stocks, make sure you thoroughly understand each company those stocks represent before you invest.
2. Falling in Love With a Company
Too often, when you see a firm we’ve invested in doing well, it’s easy to fall in love with it and forget that you’ve purchased the stock as an investment.
Remember, that stock you bought to make money. If any of the basics that prompted you to buy into the change of company, consider selling the stock.
3. Lack of Patience
Expecting our portfolios to do something other than what they’re designed to do is a recipe for disaster.
This means you need to keep your expectations realistic in regard to the length, time, and growth that each stock will encounter.
4. Too Much Investment Turnover
Turnover, or jumping in and out of positions, is another return killer. Unless you’re an institutional investor with the benefit of low commission rates, the transaction costs can eat you alive – not to mention the short-term tax rates and the opportunity cost of missing out on the long-term gains of good investments.
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