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What are the dos while investing?
What are the don’ts while investing?
Don’t you want to be a hero in the equity market?
Read ahead and discover the costly mistakes while investing. This article will definitely
help you take off on your journey to be a SUPERHERO in Equity Investing.
“Investing is not nearly as difficult as it looks. Successful investing involves doing a few things right and avoiding serious mistakes.”- John C Bogle
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Rule#1 Do not invest based on a trigger
Many investors invest based on a trigger.
What about you?
Do you invest based on a trigger?
For eg: You might say: “I will wait for the election to happen,
I will wait for a reduction in rates and then invest”.
What if that doesn’t happen?
As the result can be positive or negative.
Remember, the market is always volatile. Hence do not keep waiting for a trigger.
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Rule#2 Never follow a trend in the market
There will always be trends in the market that will lure you towards investments. You may just start investing based on the trend.
For eg: Your mutual fund investment is giving 7% to 8% returns but there might be some trending investments that give you 30% to 40% returns.
Do not invest based on the trends or the returns as these trends will not decide the future returns in a particular sector or company. You are there for the long term and know that a trend can give you returns in short term but it can also eat up a part of your returns.
Hence never follow a trend in the market and invest.
“Simple but profound!
Even best of the best schemes…
– may give poor returns
–may not beat inflation.
The future is highly uncertain.
The best way to manage these uncertainties is to save more.”
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Rule#3 Logic vs Emotion
Decisions based on the following factors include logic:
- Companies making a profit,
- Sales growth,
- The business they are into,
- The promoter is very futuristic,
All these are logic-based decisions.
As a bonus, we have an Investing checklist, for you: Stock Investing Checklist. You can go through this checklist before you invest next time.
While decisions you make when you are happy, sad, excited, angry, etc. are based on your emotions, which is not the way to invest.
Investor behavior is always important hence keep your goal in mind and don’t apply emotions when investing. You should invest based on logic and not your emotions.
“Different Kinds of Fears:
March 2020: Fear of bottom
December 2020: Fear of Peak
But ONE strategy works wonders in both situations:
Rebalance & Maintain Your Asset Allocation.”
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Rule#4 Do not time the market
“Time in the market is more important than timing the market.”
Focus on the time that you have invested in the market and also the purpose of your investment, i.e your goal. Map your investments to your goal and stay invested until you reach your goal. This is the right way to invest.
“To generate good long-term returns your portfolio needs to go through periods of
-negative return
-high return
-low return
-no return.
Have enough conviction and patience to stay the course.”
Don’t you want to be a HERO in investing?
Hear more from the expert himself, Mr. Jeevan Koshy Tharian. He will take you through the different do’s and don’ts while investing. Watch the video here below:
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