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Five common mistakes beginner investors make

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Five common mistakes beginner investors make

Being an investor is an attractive lifestyle because you have full control over your destiny. All of the money you make is entirely down to your efforts. However, with such a sought-after lifestyle, many people are attracted to it. Most of these people will make mistakes. If you are looking to get into trading, here are the most common mistakes that beginners make and how you can avoid them.

beginner investors

Getting investment and speculation mixed up

Investment is all about smart use of your money and a regular stream of income into your pocket. It is a long-term plan that will provide security for you. Speculation is more like gambling – blindly putting lots of money into a stock based on a hunch or someone’s tip is not investing. Some beginners go into investing thinking that they will be able to make loads of money very quickly – the only thing that they will get quickly is disappointed.

Not spending enough time on research

We live in an age of easy-to-access information – investors must take advantage of this. Before you make any investment, it is essential to read all you can about the company. Look at its history and past performance. Is it good at weathering economic storms? Does it have a good history of exciting consumers with its products? Does it have a good management team? What are its economic forecasts like? Make sure you can answer questions like these, as well as many more before you make any investments. You should also read about your chosen industry and market on respected publications. The Bull Asia is a useful resource if you are dealing with Asian markets.

Not diversifying

Remember the saying – don’t put all your eggs in one basket. Diversification is an important way of making sure that your portfolio is resilient in the face of downturn. If any one of your investments begins to lose money, then the others should provide enough money to protect you. However, do not over-diversify. When investing, it is always better to have a few different investments that you are an expert in, rather than loads of different ones that you only have a superficial knowledge of.

Forgetting about the fees

The fees you have to pay on an investment can have a serious impact on your profits. Make sure that you are entirely aware of the fees before you commit to anything. The longer you hold on to investments and the less trading you do, the fewer fees you will be subjected to.

Not bouncing back from early failures

Everyone is going to fail at some point when they start their investing careers. It is inevitable. Some people don’t bounce back and decide to give up if they experience failure early on. You have to go into this expecting failure to happen at some stage. It is essential that you don’t invest too much early on. If you blow all of your investment capital early on, then you will find it much harder to bounce back because you won’t have any money to spend.