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Warning: Seven investment bad habits you MUST avoid at all costs

by , 21 June 2013

When investing in shares, it's all too easy to fall into some bad habits. If you want to increase your chances of investment success, it's crucial you avoid these common investing faux pas…

Once you commit your hard earned cash into shares, rationale can end up out the window.

To become a successful investor, it’s crucial you avoid these seven investing pitfalls, as Gareth Stokes explains in Fear, Greed and the Stock Market

Avoid these seven bad habits on your path to investment success!

#1: Falling victim to fear’s persistent attacks
Fear prevents you from acting rationally, and might prompt you to sell out of a winning position, or to sell out of a position without giving it a good chance for success.

#2: Listening to greed’s vicious whisper
Greed is perhaps the most damaging emotion in the world of investment. Many an investor has lost it by aggressively chasing the big payday. If you’re disciplined you’ll be able to take the appropriate actions and avoid falling victim to this basest of human emotions.

#3: Getting ‘trampled’ by the herd
Following the herd is one of the easiest ways to get into trouble. Only go along with the herd when you’ve completed the analysis and it makes sense to do so.

#4: The real danger of falling in love with a share
Love too can play a role in your investment game. Many new investors get so caught up in their share analysis and studies of a particular company they fall in love with the share. From this point, the game of investing becomes a dangerous one. Avoid falling in love with a share because it makes it difficult to sell the share when the time is right.

#5: Going to extremes
This is never a good idea in life – and likewise is not a great idea in the investment world. You need to maintain a balanced portfolio and so should never follow a particular idea or trend to the exclusion of all others.

#6: Getting stuck on beliefs
You can’t afford to take a stubborn view on the market or any aspect of your investing. You’re investing to learn – and you learn by continually improving your knowledge. If you hold onto a belief that’s wrong, you’re going to do tremendous damage to your portfolio. Be open to change because change is where the profit is.

#7: Losing touch with the market
No doubt you’ve heard the expression “Ignorance is bliss!” This saying has no place in the investor’s vocabulary. You must stay up to date with news on the companies you invest in. You need to make sure you watch the share price on a regular basis. You also have to be ready to take action if any of your investment rules require it. A stock market investor can’t simply walk away from his portfolio.

There you have it. By avoiding these seven investing pitfalls at all costs you can boost your chances of becoming a successful investor.

Warning: Seven investment bad habits you MUST avoid at all costs
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