Below the most common mistakes you can make an investor when investing. No one is exempt from making mistakes, even as an expert investor, as recently recognized Warren Buffett himself.
We will focus on the mistakes that often make a novice investor, the first of them, certainly not understand the kind of action or investment vehicle which is holding its “commitment” of capital.
1. Not understanding the investment product.
Many new investors are bringing to market the bag because they heard it was 30% more profitable than fixed term or has been 15% more profitable than any mutual fund. That’s the bag, but inside the bag, you choose what action you invest.
As in business, you must have a minimum knowledge of what you’re doing; have an entry strategy, a defined exit plan and a basic study of the company and the market where you are investing.
Otherwise, only you have the option of putting your money in the hands of others and they take care of investing. You can do both on an exchange, mutual funds, but as we talked more than once, doing this is the closest thing to bet and a bet, you can come out red or black, the color comes out, making the investments in this way, never learn what it takes when investing.
2. Focusing on the short term.
This error is made very often, either because we read that great millionaires earned 3.000 billion dollars in a single morning or because the neighbor of a friend of a cousin of yours, you heard that makes a lot of money this way.
Well, some experts is that investors can earn thousands of dollars in less than an hour speculating on the values of the financial market, but it is also true that this is only possible when you’ve invested billions.
If a person invests U.S. $ 1.000 million at 10 am and 12 noon the shares were up 1%, the gain of this person is 10 million euros in a single morning.
If instead, you invest € 1000 at 10 am and 12 noon on day your shares are up 5%, your earnings are 50 €, which subtracting commissions, have hardly won anything.
It was always said that stock market investment, we must focus on the long term. In the long term, where the values go up and down continuously, even going over a long period in a bear market, over time, tend to stabilize and increase their value over the years. Of course in this process, may be the case that it’s value for some specific reason to raise and cross these points of resistance, being a good time to sell.
What is clear that a form of investing that have many retired millionaires today was to start investing the equivalent of 100 euros per month since 1960 and today, its capital is 67% higher than if you had deposited that money in a pension plan.
Of course, if some of them had decided to sell its shares in the 90 instead of 67%, profitability would be 89% in some cases. As we have already spoken several times, stock market investment, understanding is the most profitable investment.
In summary: In general, investing in stocks is profitable if we mature action.
3. Rely on financial advisers and banks.
Robert Kiyosaki put it well: “Never trust those who advise you through a commission.” Upon reading those years ago, I questioned it because I thought who better to advice on investments, that someone is dedicated to advising.
As I grew I realized what it really meant Kiyosaki is that increasingly, communities of investors give you the same advice, especially referring to the banks: “never invest in the fund that offers a bank “.
Bank managers are mere commercial product vendors, which have a boss over them, which force them to sell financial products that provide more benefits to the bank and its director, a higher commission. Therefore, do not seek profit for the client if the benefit to themselves.
If money gained or lost, simply changes hands (Wall Street).
A bank customer has two types of investors, small investors and large investor, therefore, must maintain a happier type of investor, and who will be deducted. Not so concerned about giving the investor to invest profit € 5.000, but if you care to give the investor who invests cost € 500.000, therefore, is launching two types of investment funds.
The first, in which you invest, the second, which gives it great investor benefits, thanks to the contributions of small investors. So it has been shown that no investment fund offered by a bank, has obtained the same return that the investment of a particular stock market for more than three consecutive years.
As there is widespread evidence that investing on your own, you have 75% more likely to have higher returns than investing in the fund that offers a bank. Do you still think that investment advisors play a big role?
Not to mention the brokers do not want to belittle the work of a broker, since some have more than earned a reputation based on successful investments. But never has to think why most brokers do not invest your money in stocks when they are certain that a stock will rise?
The sad reality is that they are human just like the gurus of investment, and recognize the risks, gathering information from the same place as you, the financial news. For years, good brokers will not only analyze the graphs plotting the lines trying to figure out the equation of the logarithm of an action.
Now, try to analyze companies, strategic business plans, expansion projects and yet never forget, that to give you an investment return, someone has to lose yield the same action.
Again I will say that a broker can advise you better or worse, but as you get mature as an investor, you will begin to see the figure of the broker as it is: Someone you need to invest money in shares that you want to invest.
These are the 3 most common mistakes that often make an investor when investing. We are preparing the continuation of another article, where name other biggest mistakes you can cause bankruptcy. Expect it.