4. Keeping the ‘duds’
I know of a person who had invested in unheard companies such as Patheja Forging, Shaan interval and Silverline. He refused to sell on the belief that he would earn good returns over the long term. Now, all the promoters of these companies are absconding!
It is important to invest in good quality stocks, choose a good fund manager, invest small amounts at regular intervals through Systematic Investment Plans (SIPs) and hold for a long term. That will make money for you.
5. Incorrect asset allocation
Too much of debt for the long term or too much of equity for the next quarter, is a sure fire way to leave you with little returns. It is wise to build a portfolio based on your risk capacity and financial goals.
Calculate: What should your ideal asset allocation be?
6. Timing the market
Even experts cannot time the markets, leave alone investors. No one knows where the markets are headed in the short to medium term. Hence, it is foolhardy to time the markets. Instead, a disciplined investing, irrespective of market levels, pays off in the long run.
7. Overconfidence
If you hit a couple of ‘home runs’ (as the Americans say), you start to believe that you will continue to hit home runs regularly. This is true for most of us -- we attribute our recent success as our creation and therefore we think we can repeat it. This overconfidence can lead to a big portfolio disaster.
So, the next time you see the vamp taking over the good guy in the serial, think of your investments and promise yourself not to fall prey to these mistakes.
Happy investing!
Read:
- These financial planners goofed up, learned from mistakes!
- Buy low, sell high: How Buffet does it
- Six tips when the markets fall flat
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