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5 Mistakes Not to Make When Investing in Stocks

Monday, January 29, 2018
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When it comes to investing money, there are tons of options to choose from -  from real estate to bonds and even precious metals but nothing offers as many benefits and safety as investing in the stocks.

We are not the only ones with this opinion, even experts at Investors Hangout seem to agree.

Stocks offer one of the most fastest and safest ways to grow your money. However, there are many people who are not careful enough while investing in stocks and end up in hot waters by making mistakes. It is essential to know what these mistakes are and how to avoid them.

Here are 5 mistakes not to make when investing in stocks:

1.       Holding On To Stocks Longer Than One Should

Most of the new investors in the stock market have this mentality of setting a benchmark price to the shares they have. They make the decision of selling their shares only when the market hits the same top level which it did in the past. This causes them to hold on to their stocks for a longer period of time, preventing them from making a profit when they should.

One shouldn’t set a benchmark price but try to comprehend the fundamentals of the market. If the market seems to falling and you’re getting a nice price then it is better not to be greedy, and sell the shares.

2.       Going For Too Much Margin

Leverage trading or margin trading is popular and can make you good money, but it can backfire as well. While margins have the tendency to help grow your money, they have their drawbacks too.

This is the money you borrow from your brokerage firm and you will have to pay it back with an interest rate. Hence, losing is not an option here.

Sometimes, when too much margin is used and the investment goes south, you can end up owning too much money or losing all your deposit.

The right thing to do is to keep an eye out on your positions and not risk big.

3.       Not Considering The Factors That Could Influence Investments

Stock market is a roller coaster ride, you don’t know when it will rise and when it will fall. However, what you can do is monitor certain factors and protect your positions.

Remember to keep an eye on factors that can influence prices. For example, if oil import is banned tomorrow, oil prices will go up due to the change in demand and supply.

4.       Putting More Than What You Can Lose

Never invest more money than you can afford to lose. Always invest your savings only that you can do without, because the risk is always there.

5.       Not Considering If The Current Company Is Good To Invest In

One of the most common mistakes that investors make is to buy more stocks when they suffer a loss. Thinking that buying more stocks at lower price will help you average down on your loss is a mistake.

See the trends and then invest and do not invest in one company only, and make sure to diversify.

The Verdict

These are 5 of the most common mistakes made when investing in stocks. Make sure you don’t fall for them so that you do not have to face a loss.

 

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