Some Common Investor mistakes

  • Posted By :
  • Monday Oct 16, 2017

Income is one aspect which is the base of our financial build; however, what and how we save is crucial in terms of capital appreciation and wealth accumulation. As we age, we have added responsibilities like saving up for our retirement and fulfilling needs of our children. It, thus, becomes important to not slip-up in this process. Let’s discuss the 7 common questions investors ask and why the answers are vital.

  • Should I follow the same investment strategies as my relatives since they have been very rewarding?

  • Each individual has separate priorities and one should not base investment decisions on how his/her peer is planning.

  • I was expecting 20% gain but now I am disappointed?

  • Post goal-defining and corpus-provision, it is imperative to understand that even with the best designed portfolio, it is impossible to predict or control capital gains. The basic nature of the market is volatile and more so with future being what it is, ‘unpredictable’, it is important that as investors we be sensible in our expectations.

  • I am keener on Short-Term gains, long-term investment makes me apprehensive?

  • Focus more on meeting long-term wealth accumulation. Investment objectives should not be based figuratively. List out more practical facts and do not go for fashionably famous investment schemes just for the sake of it even if they do not fulfil core preferences. Furthermore, expecting short-term returns from long-term funds and vice versa is impractical.

  • I thought I looked profoundly into aspects while building my Portfolio, what went wrong?

  • In an attempt to build a fitting portfolio, often investors over indulge in a particular security or sector. Another fact is over diversification. In unexpected hostile market movements, this can impact performances adversely. To combat this, one should balance things out and seek expert counsel.

  • Why do I need to revisit my portfolio, I have an advisor who manages this?

  • Remember, your portfolio might need rebalancing at the end of a quarter. Although, it is being managed by a fund house, it is essential that one reviews his/her profile frequently at an individual level as well. You should never over rely on your adviser; this way you are in better control.

  • Is it necessary to find out my fund manager’s performance history?

  • Your fund manager is like your financial partner who works to boost your capital gain dedicatedly and for this reason; choosing an unskilled or inexperienced advisor could impact your investments negatively.

  • Taking Incorrect Fundamental Decisions

  • These are preference and performance level decisions that impact investments in a certain way.

  • Why is it required to incorporate risk-bearing levels?

  • If an investment is made adverse to the risk appetite, it can result inappropriately. For instance, if risk-bearing is high and investments made are low, return will be substantially lesser as compared to expected value. On the other hand, if despite low risk-tolerance, high capital investment is made, true to form, one will be in an unfavourable financial squirm.

  • Should my decisions be return-centric?

  • This attitude is wrong in terms of financial judgment. Past performance is no indication of an assured future feat. While it is important to assess the performance graph of a particular fund, incorporate personal preferences primarily.

  • I am outcome driven, is it bad?

  • It has been observed that investor-decisions are influenced a great deal by fear or greed leading to inadvisable hasty conclusions. Do not decide basis of a one-quarter or two-quarter result unless the security in question is performing in a particular way over a year’s time. The principal mantra of clever investments is ‘Buy-Low-Sell-High’.

  • How often should I trade?

  • The key here is patience. If a portfolio is interfered with too often, it will reduce the return capacity.

As a Final Point

Never let emotions get in way of your investment decisions; these are brain-judgements. Carefully adhere to these seven pointers for a successful financial objective to reap maximum profits from your investments.

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