Common Investing Mistakes and How to Avoid Them


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One of the first mistakes that a lot of investors make is not diversifying their investment portfolio. By selecting only a few companies to invest in or by investing in only one industry investors are basically putting all of their eggs in one basic. If that industry fails then all of the investments made by the investor will suffer. To avoid this problem it is recommended that you invest in at least 10 different industries and that you invest in at least 20 different companies. If you invest in bonds you may want to stagger their maturity dates. If you don’t want to try and diversify your portfolio on your own you can enlist the help of an investment professional or you can diversify your investment portfolio by investing in mutual funds.

Another mistake that many investors make is trying to time the market. One of the biggest timing mistakes that people make is to invest in popular stocks after their stock price has increased significantly. Another timing mistake is selling a stock when you think it is about to drop in value. Few laypeople can judge when a stock will drop in value, and fewer can judge when they should reinvest. Because of this you can loose out on investment gains your investment would have received had you just let your investment ride. While trying to time the market doesn’t always lead to losses, you can improve your chances of correctly timing the market by relying on the guidance of a professional financial advisor or investment specialist.

The third mistake that a lot of investors make is not reinvesting their money after they make a sale. Many investors, in fact, keep their assets in cash after they make a sale. They do this because they are intimidated by the investment process or because they simply don’t know what other investments they should try. Again to avoid this problem you should turn to your investment specialist. They will be able to help you set up investment goals and they will be able to help you invest and reinvest your money in products that will help you to reach your financial goals.

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