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Two mistakes to avoid when buying and selling shares

by , 19 June 2014

Investing can be a great way of growing your money. There are a multitude of ways to invest according to different strategies out there. But regardless of what way you choose, there are certain things to avoid at all costs. If you make these mistakes buying and selling shares, you're sure to lose money…

Investing mistake #1: Don’t diversify enough

Diversification is one of the most well-known investment rules. And even though you might not go out to break this rule, there’s a good chance that you might end up doing it any way.

This can happen if one of your shares outperforms, Alexander Green in Investment U explains. This makes your portfolio very heavy towards one share.

Or you might even end up with shares for a company you work for. This is bad news if your employer goes through a rough patch. Worst case scenario you could end up with no job and worthless shares.

Diversification isn’t just a way to reduce risk in your portfolio. It’s also a way of increasing your chances of owning a share that’s going to outperform.

Investing mistake #2: Not keeping track of your costs

It’s surprising how many investors don’t have a clue how much they’re paying their stockbroker in costs. Every time you buy and sell shares, your broker gets commission. Then there are other fees like administration charges and management fees.

You need to keep an eye on these as they could be making a large dent in your profits. If you think you’re paying too much, speak to your broker to see if you can come to a new agreement. If not, look elsewhere to see what’s on offer.

So there you have it, two mistakes to avoid when buying and selling shares.

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Two mistakes to avoid when buying and selling shares
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