Investment pitfalls to take note and avoid

Have you done your investment portfolio? Have you wondered why you are not happy with your investment performance? Have you heard from rumours about a particular stock and chasing after that counter? There are a few things to take note when investing.

Pitfall 1: Investing without a good plan
When you decide to go on a tour. What is the first thing that you will need to do? You need a good PLAN.  You need to plan your destination! With a plan available, you will then be able to plan in details on how to get there and enjoy your holiday. Likewise in investment! You need to have a GOAL in mind and progressively work towards that goal. So! set a goal, draw up a plan and execute it and monitor regularly. 

Pitfall 2: Speculating and chasing after stocks
You hear news about a particular stock that will rise in the next few days/weeks/months and decided to invest in it. Afterwhich, you realised that you have invested that counter at a very high price and the price starts to tumble down. Thus, incuring huge amount of paper losses if you still hanging on to that counter. Thinking that the price will go up again with much hope. There's nothing wrong with investing in stock market. BUT, be sure to set goals, and invest in long term on sound and valuable counters. Work towards them in a disciplined fashion.

Pitfall 3: Putting all eggs into one basket
Many times, when we invest, we tend to invest into a particular stock and expect it to perform. There is a risk in investing all your money into 1 single stock/unit trust/fund. During the dot com days, Tech funds were attractive and people will just buy any tech funds. When the dot com bubble burst, many finds that their single investment were all wiped. Thus, diversification is the way to diversify the risk of investing into one particular type of funds/geographical or sector. There must always have a diversification in investment. Be it on the type of industry sector or geographical.

Pitfall 4: Short term speculation
Stock market is the quickest way to gain some profits. It is a double edged sword, it allows quick profit and it allows quick losses too. Thus, avoid short term trade if you're risk adverse type of investors. Investment is for the long-term, with this in mind, your investment should be based on sound fundamentals.

Pitfall 5: Start investing too late
It is still not very late to invest now. Starting to invest early has greater advantage over the long run. The earlier you start investing, the more you can benefit from the power of compounding to boost your returns. By regularly investing a fix amount of money or dollar cost averaging over a long term period. You will definitely enjoy the fruit of return when retire.

Lastly, there is no shortcut to earn money. You need to plan and strategised your way to reach your goals. With that objective in your mind, and working closely with a professional financial planner will help bringing you closer to achieving your investment objectives.

Important notice:
The information herein was obtained from various sources; The blogger does not guarantee its accuracy or completeness. The blogger will not accept any liabilities whatsoever whether direct or indirect that may arise from the use of information in this publication. Past performance is not necessarily a good indicator for future returns. Please consult your financial advisor for any intended implementation.