Thursday, 16 February 2012

Eight investment mistakes must avoid by an investor

In investment you must know that the theory and practice of investments. Investment means depositing or spending money in any investment opportunities with the expectation of making more money in the form of interest or profit. This may say growth, dividend, interest, income or anything which increase the value of invested instruments or earnings from the invested items. These investment methods follow some basic principles which cannot be violated successfully. So all investors must keep in mind the following matters and should avoid it for your secure growth of investment.

An investor must avoid anything which violates the basic principles of investment.

Quick rich programs: You must be aware that no any investment makes you rich immediately. Investments give you only stable return or fluctuating return. But it does not make you a multibillionaire in one day or two. If anybody claims so, you must simply avoid it for the safe side of your money and investment.

Risk & return: This is one of the important principles of investment that if there is a high return there must be high risk. Some safest investment like fixed deposit in banks offers you a stable return, but not high return. It could offer you only normal rate of interest as per your low of land. There is no high risk and high return in it. But volatile stock market can give you a high return and at the same time it is high risky also. Anything against this risk & return principle must be avoided.

Blindly follow past performance. You might seen that the footnotes on mutual fund advertisements that, Past performance is not supposed to repeat in future. You must not invest in any financial instruments just by seeing its past performance. A mutual fund may perform adversely in future and even real estate also may fall in future with any reason. So analyze well before investing in any financial instrument or property.

Invest only in one type of investment: This is one of the common investment mistakes of a good portion of investors do. If you invest all your effort in one type of investment, it may fail and you suffer a heavy loss. So diversify your investment in a handful of investment methods and schemes. If one fails others win.

High Cost of Investment: Cost of investment also an important matter which may affect your investment adversely. Fees and other related expenses may reduce your net income. Even tax also reduces your income a lot. So plan your investment cost effective and tax effective as per the law of the land.

Follow the multitude: This is one of the important mistakes an investor must avoid. You should not follow others while investing. You should create your own strategy to invest. You can get advice from others and take your own decision. Do anything with your own strong decision and certainty.

Ignorance: You should invest only with full conscious and knowledge. Without having a thorough knowledge and awareness you must not invest in anything.

Invest without a goal: A financial goal is a must for all investment. If you don’t have a goal you could not reach anywhere. So you must have certain predefined financial goals to invest your hard earned money.

Avoid the abovementioned eight investment mistakes to become a successful investor. If you follow strictly these things you can be a good investor and can harvest well from your investment and can reach all your financial goals in time.

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1 comment :

  1. Thanks for these investment mistakes one should avoid to go far through the successful path of investment.