Success comes with a package of plenty of Do’s and Don’ts. There are innumerable guide books for anything and everything in this world. So is the way with investing. A few steps treaded in the right direction make all the difference. This is why few investors have made a fortune out the same market others have a borne a loss from.
As far as successful investing is concerned, it is more of “Do Not’s” rather than “Must Do’s”. cautious trading and diligent asset allocation lay the foundation of an efficient portfolio and successful investor. Here are 9 things you should not do if you want to ace the art of investing;
- Pay a hefty fee for their investments
There are investors who pay around 2-3% annually as an investment fee for their mutual funds. this in no way makes any sense. If you look out carefully there are a lot of mutual funds which themselves comes at this cost.
High fee definitely digs a hole in your portfolio investment amount and keep your returns lower.
Ideally, the investments fee must not be more than 0.25% or at max 0.50% of the total portfolio value.
- Be impulsive
Seasoned investors never make impulsive decisions. They always have a plan for all of their investments be it small or big. They have a proper investment strategy and plan to which they stick to and do not deviate from it irrespective of the market shape.
- Get distracted or disheartened by market lows
As mention in the point above, successful investors do not worry if the markets are low because they have a long-term investments plan and they know the corrections are going to settle down in some time. The markets always work in a pendulum motion, if today it’s a Bear market it is bound to get back to Bull and then iterate.
- Buy on high
This is one of the most destructive things we do as investors. Most people wait for the markets to regain their structure and wait for the prices to get a ‘Little” high and then buy stocks. This is totally against the basic fundamentals of making profits.
If you adopt this investment approach, you are bound to lose on to the opportunities which will make greater returns. Buying when prices are high is n itself very expensive thing to do and limiting force as far as the returns are concerned.
- Disregard taxes
No established investor ever ignores taxes rather they invest their money in maximum tax saving avenues. Trading legally is one important pillar of sustainable investing. They invest in ELSS funds, PPF, ULIP, NPS, etc. but never ditch paying the taxes.
- Ignore free money
By free money, we mean the employer contribution to your savings. there are a lot of companies which offer an excellent contribution towards your EPF account apart from the standard 12% mandatory contribution. There are companies out there who match the employee’s contribution to pension schemes. A vigilant investor never misses on to such opportunities and makes maximum out of them.
- Falls prey to emotional investing
No, and absolutely no veteran investor falls prey to the trap of emotional investing. You can check the history for examples of people sticking to a particular stock due to its presence in their hearts and eventually bankrupt due to its poor performance. This is no way to justify your investments. Do not forget about your goals and long-term plan, if the stock(s) adhere to your plan keep them, else sell them.
- Ignore market etiquettes
Successful investors do no ignore market etiquettes and get familiarized with market trends and procedures. If it is a small to mid-cap fund, it is bound to come with high risk and if it a large-cap fund, the risks are comparatively lower, such facts and metaphors of the stock market are well known to seasoned investors.
- Review their portfolio daily or weekly
It is good to review your portfolio but not too often. People who review their portfolio on a daily basis or weekly basis usually end up making impulsive decisions due to temporary market corrections. Buying a stock which is a good-performer today or selling one which is a bad-performer today is not a wise thing to do. Portfolio review should be limited to twice in a year at max.