Investing Basics – Pitfalls To Avoid

Pitfalls can ruin even the healthiest investment plans; hence, before racing of for investment plans and new strategies it is important to be aware of the common pitfalls due to which even the most of the competitive day traders face losses in the stock market.

o Wait for miracles: grow up! This is stock market and there is no guarantee for the stock market to rise on a particular day. Waiting for the right time is useless. The right time for investment is today. Waiting and doing nothing cannot generate returns. Hence, get ready for work and start earning satisfactory returns.

o Investing for the short-term: if urgent cash is needed there is no point investing in long-term investments. Plan and invest the money accordingly that may serve your urgent need. However, make sure that you save heaven’s for needs to be fulfilled. Also, after quenching your immediate needs make sure that you integrate the investments well by investing in both long-term and short-term investments. Also, diversify the shares to be purchased.

o Turning down free money: a dollar being offered without any strings attached is never left by any person in the whole world. Then why those schemes regarding the retirement plans and others that help you get better investments. Participate intelligently in the tax-free schemes to save on taxes and invest better.

o Playing too safe or scary: excess of everything is bad and same applies to stock investing. Investing too safe and getting meagre retune takes you to nowhere as the costs including brokerage fee and time are to be covered. Similarly, playing scary can let you lose heavy amounts that may take too long to recover or may throw you out of the investment business. Hence, determine your risk tolerance levels and trade in stocks accordingly.

o Keep a salary account: investing in stocks is a business. Hence, a profit or salary account must be maintained. Get yourself a salary for investing or make an account of profit. It serves many purposes including covering the cost of investments and providing incentive to the trader to make better investments. Also, it helps in having some amounts safe with the trader and provides liquidity at the time of need.

o No investing before the credit card payments: if you have some credits card payments to be made, pay them off right now, even before allocating you’re saving to investments. Some credit cards have high rates of interests, as high as 16-18%. Hence, pilling your credits and investing from the amounts is not a smart decision. First pay off the debts and then start investing in stocks.

o Invest and not play: stock investing is not gambling or getting lotteries for the sake of money. It is a smart decision that takes considerable amount of calculations and intelligence to make money. Hence, playing with stock my turn unfavourable and lead to loss. Always take it as investments that may get too grounded if not made smartly.

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