Avoid These Blunders When Selecting The Best Investment Plan In India

10 Common Investment Mistakes to Avoid when Investing
Conclusion

Having the right investments is essential for every individual to ensure that they have a sound investment portfolio. Having a good investment portfolio can ensure that the investors can earn maximum returns and increase their wealth. In order to make sure that investors get the best investment options in their kitty, there are certain common mistakes that have to be avoided, especially by novice investors.

10 Common Investment Mistakes to Avoid when Investing

1. No Plan For Investment

People do invest in products but there is no plan. In the name of insurance, most investments are made. Even in the case of mutual funds, there is no strategy, it is just a clutter of products which does not carry any meaning when seen together. No wind is right unless you know which harbor you have to reach.

2. Too Short of a Time Horizon

People forget that the most important tool of wealth creation is time in hand. People want quick money and even though their financial goals like retirement, kids’ higher education, etc are far off, they still want quick returns. At times to make quick money, they take an undue risk like Futures and Options, trading, etc.

3. Chasing Performance

Investments are made in funds which have given the highest performance last year. Nowadays, gold is preferred as it is rising. Recent past performance is no measure to judge future performance. Investors should look at past track records like 5 years, 10-year return and that too just as one of the tools to select the fund, not entirely depending on that also.

4. Watching the Markets and Predicting Them Is the Key to High Returns

One of the most common mistakes investors make. Market is a complex animal and cannot be predicted by anyone. Even the professional managers can’t predict it. The more investors try to do it, the less chances of good return. In the stock market, inactivity plays more of a role than activity.

5. Mixing financial vehicles: insurance with investment

Insurance is for present planning– “ what if the bread earner is no more today” and investment is for future planning – “ after 10 years, I need to marry my daughter”. Mixing these two makes no sense and investors should keep it separate. Buying a Term Plan for insurance needs is the best policy.

6. Following the herd

Investment is not a game of football where teamwork is required. It is a game of chess where each individual has to plan for his unique need and situation.

7. Churning your investments

Frequent changes in the portfolio without any plan or just to increase the return is not a right strategy. It is only the cost of taxation and other charges. Also, many distributors and bankers advise you to churn very often as they meet their sales target and you are no more than just a target.

8. Unrealistic expectations

Return out of any asset class depends on economic conditions. If inflation is high, FDs give more return and if inflation is low, they give less. Equity funds will give returns which are more or less in line with the growth of the economy. Investments made just to make high returns are usually unsuccessful.

9. Refusing To Accept A Loss /Mistake

What would you do if you took the wrong route? Obviously you will return back, though it may have cost you time and money. But the same thing does not apply with most investors when they have chosen the wrong investment. Correct yourself, if you find that there is a mistake, don’t hang up with that investment.

10. Over monitoring Your Investments

Many people look at their portfolio so frequently that they in a way become addicted to it. One should always give time to investment to grow and then reap the benefits. Over monitoring would mean that investors are emotionally attached to market movements and this is one of the biggest reasons for people not making good returns.

Conclusion

There are many investment options available to investors today. Choosing the right type of investment is based on many factors like investment style, budget, risk-return relationship, etc. These are factors that have to be avoided to make good investments.