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EVER watched any saas bahu sagas on television? How many blunders the protagonists in these serials make! And for their howlers, they are beaten up, jailed and even murdered (only to miraculously become alive again!).
But, alas, life is not an Ekta Kapoor soap where you can make umpteen blunders and get away with it.
For your investments, you might have to pay a heavy price for even small mistakes that you do. Here are the seven most common blunders that investors make.
1. Believing that trading is the same as investing
When you buy and sell stocks and mutual funds at the drop of a hat (read – without any research or planning), you are essentially ‘trading’. This will not help you to build long-term wealth. Yes, this is a fantastic way to make money, but for your broker, not you!
See: What I learnt from Rakesh Jhunjhunwala
2. Being too conservative with your money
‘Real returns’ is the keyword here. These are returns post inflation. Putting away money in safe options such as bank deposits, Public Provident Fund (PPF) and so on might give you a negative real return. This is true especially in times of high inflation, such as now.
See: Inflation 'n' Vijay's money
3. Being too aggressive with your money
This is just another way to lose money. Pumping money into high risk avenues, such as equities, without understanding can prove dangerous. A Warren Buffet saying sums it all up -- To finish first, you have to first finish!
Read: How much should you invest?
Also read: PV Subramanyam's blog
Photograph: Chip Somodevilla/Getty Images
