6 Mistakes That Could Cut Your Investment Journey Short

Whether you’re a new investor or a mildly experienced one, there are a few actions can cut your investment journey short with specific stocks in your portfolio

The journey to financial freedom, comes with the first few steps and investing is a key element of those few steps as it is one of the primary actions that would propel you to grow and multiply your income.

With the many strategies involved, the many styles of investing, the many actions to be taken, and the pool of information available to the investor, it can be daunting to focus on ensuring investment goals without making mistakes or getting distracted.

However, whether you’re a new investor or a mildly experienced one, there are a few actions can cut your investment journey short with specific stocks in your portfolio. Here are just 6 of them to be wary of:

Buying based on Brand Names

In a world where information can easily be spread, it is very easy to get caught up with the hype of how a business or brand seems to be performing.

Certain brands are great at perception management so much that they can completely becloud the actual performance of the business or make promises that even while too absurd, sound believable.

Nothing beats objectivity in investment. If you don’t know the details of an investment or it seems too complex to understand that you just ride the wave of how it seems to be performing, then you just might be in for a shock that isn’t palatable to you.

Buying the Hottest Stocks in the game

Just as winners attract more winners as friends, winning stocks are known to attract more investors – it is only logical. However, buying a stock that was recently very good in hopes that it would keep doing well surpassing its current state, is a risk you might not be able to take.

Buying at the wrong time might mean investing in a newly bearish stock and this might force you to make irrational decisions to save your face when things start to seem awry.

Again, there are so many amazing ways to pick stocks but choosing those that seem to be on a winning streak solely because of that, is not a sustainable way.

Buying Solely Because It Was Recommended

When you purchase a stock solely because somebody who probably seems to be more knowledgeable than you suggests it, you are also setting yourself up for failure in the long run.

There are many reasons investors carry out their own analysis and chief on the list is that various investors have their various peculiarities. From risk levels, to age, to investment goal and so on, one person’s goat meat can be another person’s poison.

You typically know what is best for you more than another person. Do your research so you can build your confidence on every stock that is in your portfolio.

Taking Very Little Risk

It is okay to be risk averse as an investor. However, there comes a point where the investor’s risk level is too low, it isn’t even worth it any more.

The reason we all invest as opposed to just saving money and building those funds in our bank accounts steadily into the future, is that time value of money shifts and inflation typically makes the value of our money reduce.

If you take on too little risk, not only would you lose the chance to grow wealth tremendously, you could also lose money to inflation and reduce the actual purchasing power of your funds.

Reviewing Your Investments Often

If you are one of those who check the state of your investments at the slightest chance to do so or on a daily basis, then it is only a matter of time before you react to the investment news coming your way.

While it is also not good to dump and ignore the state of your investments, it is far worse to mentally stress yourself by checking its growth and recording regular volatility movements especially if you plan to invest for the long term.

Holding on to losses

While it is great to want to ride the wave of an investment, following it all through its business life-cycle, holding on to a losing stock is a far bigger issue. This doesn’t mean you should pull out your investments as soon as losses show up.

However, hanging on to strands of hope in anticipation for a change when all indicators show otherwise could cost you a lot. Do not let fear of losing out or sentiments prevent you.

A great way to know for sure is to have a stop loss order in place for when the value of your investment hits a certain point.

No investor is completely immune to making mistakes. We can only keep learning, and keep growing.

Written by Lawretta Egba.