Stock Investment Wrong You do not want to do
Do not lose money. Billionaire investor Buffett himself created the mantra of this popular investment world. Of course, taking into account the number of stock market transactions involved in the risk, it is easy to do it together. Even the experienced investor has one or more losses. However, by avoiding the following common investment pitfalls, you can minimize your losses and make a profit from your investment.
1. Put money in a place you do not understand. So you heard that your neighbor just remodeled his profits from the stock market in the house. You want your own share, so you rush to buy the stock of the first company you see in the list of beneficiaries. It would be interesting if you were Homer Simpson, but in reality, you just made a very unwise decision. Before you buy a company stock, you should first clearly understand its business model and financial situation. But also the stability of the sector to which it belongs. Even a solid business, if its industry is in trouble, may also suffer a dirty devaluation
2. Become emotionally attached to your stock. Even though reasonable financial reasoning tells you to sell your stock, still insisting that your stock is tempting. After all, you've spent so much time and effort on the market reports and company information pages until you finally find the ideal company you want to invest. You also want to prove that you made the right decision when choosing the company. However, holding too long stocks, because pure emotional attachment can lead to huge losses. If your stock has been low and has signs of trouble for the company, then be willing to sell it even if it hurts. Remember: you buy stocks to make money; you should not marry them
3. Put all the eggs in one basket. You are not afraid of adventure, but you do not want to end the shameless. Then your favorite word should be diversified. When building your equity portfolio, be sure to buy stocks from all major industries such as real estate, industry, finance, oil and services. This way you can prevent your entire investment from dropping if a department takes it slow. A good rule is to limit your investment to 10% of the portfolio.
4. For the turnover overload. The stock market is where the impulse to buy (and sell). If you are used to buying stocks, selling stocks in a short time, with little or no revenue, then your broker must now have a dirty commission. Keep in mind that each transaction has transaction costs and taxes. If you are not careful, then your profits may easily be wiped out by the high costs associated with your high turnover.
Knowing the potential mistakes in equity investment is a big advantage for you. There are a thousand and a trap out there, you may trip, but the important thing is to learn that you go along. After all, even billionaire investors have made mistakes