Individuals who are looking to invest or just started investing should be very careful as they are new to the field. When you are planning to hold any financial product for long term with an expectation of capital appreciation or return on investing can be said an investment.
In any financial product, tenure of the product is very important as creating wealth happens only over a period of time.
Here are few common mistakes one should avoid
1) Constantly Monitoring Investments?
When you have newly invested, you tend to monitor it unnecessary. One should know that doing this will not help. Frequent changes in your portfolio will not help you fetch any better return.
Any minor changes in the economy may impact your portfolio in the short run, but, in the long term it remains intact.
2) Having No Plan
One should have a proper plan on how and where to invest along with analyzing his risk capacity and financial commitments.
3) Following the crowd
If you are sticking to a particular formula which worked for your friends, it may not be a good idea. Decide on the product which suits you the best.
4) Not learning Basics
To know and understand the financial product is very vital. More you understand, better decisions you can make. Understand the basic concept and how it works.
One should also gain fair knowledge on the economy, inflation, and GDP which should be considered while deciding any investment product.
5) Mixing Financial Instruments
Things have changed over a period of time, it is always suggested to not to mix insurance with investment. This is because, at the time of need, the amount may not be sufficient for insurance neither as an investment return.
6) Not diversifying
Investment is all about diversifying your risk, do not put all your cash reserves in a single product. Choose different products so that your risk is narrowed.