Top 10 Investment Mistakes To Avoid In Stock
Increase Your Odds To Getting Rich
8th Nov 2012
The following are the top 10
investment mistakes you should avoid:
Focusing on past performance without knowing that good past performance is
no guarantee of good future returns. Investors tend to believe that past performance is a good indicator of future
performance. The fact is many companies after successive years of brilliant performance do experience financial
woes too and turn into losers over a period of time.
2) Over Dependent On
Next, instead of past performance, some investors put in too much focus on
Number-Based Analysis. Numbers are useful to identify strengths and weaknesses, or to compare various investment
alternatives. However it cannot be over emphasized that numbers alone are not enough in determining an appropriate
3) All Eggs In One Basket
Putting all your money in a single investment hoping to make it big when
your investment strikes ‘gold’ is another big no-no. Bear in mind the knife cuts both way. Should something go
wrong, you will lose all your money too.
4) Short-sighted Gain
Another mistake is purchasing stocks before their ex-dividend date and
sell them after the dividend is received. The point that is overlook here is, the company's share price
would decline by about the same amount of the dividend on the ex-dividend date. This negate the gain you received
and in addition to this, the dividends received will create a tax liability for you too.
5) Financial Not Ready
Jumping into investments before you are financially ready is another big
mistake that many people make in their pursuit to get rich. To be successful in any type of investments, you should
clear up your debts first before you attempt to dabble in investment.
Greed. This is one of the most common mistakes associated with trading
stocks. When in a hurry to make quick money, one tends to overlook many basic fundamental rules and best
practices of investment.
7) Failure To Plan
Investing without a plan keeps you in the dark over the risks and
returns associated with your investment. You will not be able to make informed decision on what to buy , when to
buy and when to exit. It amount to jumping onto a ship without a rudder and hope it will bring you to your next
port of call.
8) Deviation From
Having a plan and not following it is as good as failing to plan. When a
plan is not followed, you lose the advantage of the increase odds in making returns from your
9) Not Having Clear
With clear and achievable goals and timelines, you can avoid the
mistake of selling a valuable stock too quickly. It helps you stay focus and enable you to differentiate between
‘noise’ that looks like bad economic indicator and the real economic disaster coming ahead.
10) Thinking You Know
Being overconfident. Learning is a never ending process. The weaknesses
you know , you can choose to learn to overcome it and improve your investment skill. The real danger that can
expose you to a potentially big risk is not knowing what you do not know.
What Are Shares
What Are Shares Classification
Top of page