Have you been tracking your favorite company’s indices daily and wondering how much profit you could have booked already? Or do terms like ‘derivatives,’ ‘index,’ ‘stock portfolios,’ ‘systematic investment plan’ and ‘mutual fund investments’ give you a rush of adrenaline?
If the answer to even one of the two questions above was a firm and enthusiastic YES, then, my friend, you are what we call an ‘investor.’ Nonetheless, successfully earning profits out of stock market investing is easier said than done. It goes way beyond simply opening a Demat account and looking at top stocks to invest in India, which is why novice investors often end up making huge mistakes in the market, thus booking heavy losses.
But what if we were to tell you that you could avoid these losses simply by avoiding some common mistakes that usually occur during easy stock market investing? Read on to find out.
1.Not Researching Enough
The first and most important mantra about stock marketing investing is to study the market well. The companies’ value in your portfolio changes daily, but it is most of the time fueled by a sudden event or a trend in the market. Thus, to make profits successfully or hedge your investments, it is extremely pertinent to keep abreast with every development in the market that can potentially affect your stock portfolios.
You can also commission the help of broking firms or individual stock brokers for this purpose. These are specialised professionals whose only job is to apply a quantitative research method to study the market and give suitable purchase/sell calls to their clients.
2.Being Too Impatient
The stock market is essentially a wait and watch game. Even the biggest stock brokers and investors often wait and gauge the market and investor sentiments before making any big buy or sell on a particular day. Hence, you must learn the art of patience. Nobody makes big profits in the market initially, however, if you are too impatient, you will certainly end up making a big loss.
3.Becoming Too Loyal to One Scrip
As an early investor, it is natural to read about a company and feel emotionally connected. You may sign up for a Systematic Investment Plan (SIP) for mutual fund investment and become too comfortable in your position. This is something that you must avoid. A systematic investment plan (SIP) is a good bet if you are a risk-averse investor looking for a secure position. However, you must make it a point to reevaluate your portfolio at regular intervals to ensure you’re consistently making profits and your investments are not static.
4.Failure to Diversify
Diversification is one of the most integral factors in stock market investing. Here, the concept of not putting all your eggs in one basket is followed almost biblically. Hence, you must, as a golden rule, ensure that you have diversified your stock portfolios into a good mix of equity and debt or even in different kinds of investment models like exchange-traded funds (ETF) and thematic funds.
5.Following Hearsay Blindly
Last but not least, this is one of the main reasons most investors book losses in the market. Even though you have commissioned reputable broking firms or a stock broker to watch your investments, you must always conduct your research at an individual level as well.
Additionally, you should also try to avoid advice that provides you a blanket list of ‘top companies to invest in India’ or ‘top stocks to invest in India’ without reading up about them yourself.
A Game of Trial and Error
Stock market investing is nothing but a game of trial and error. You may get it right the first time, or it may take quite a few attempts as well. Further apart from the common mistakes above, there are also some other errors in the step that investors have been observed to take to avoid as you move forward in your stock market journey. Some examples of these are having unrealistic expectations, selling lower than your purchase rates, fearing a market crash, panic trading due to rumours, and reading too much (Yes, reading too much can also be a problem).
This can be quite intimidating, isn’t it?
This is why there are very specific stock investing platforms like Stoxbox, that provide their clients with well researched, ready-made, high-quality portfolios’ to make their stock market investing easier.
These high-quality ready-made portfolios have the right mix of stocks and ETFs that are backtested and based on thematic investing models curated carefully by their Quantitative, Fundamental and Technical research teams. Through Stoxbox, these professional research teams consistently study the market and provide their customers with stock investment ideas that can help them avoid common investment mistakes and the potential to book good returns from the stock market.
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