Investment Mistakes To Avoid
The secret to great investing is not a higher IQ. It is a factor of great market knowledge and a winning strategy. Here we equip you with market facts and strategies to enable you avoid mistakes and make good investment decisions.
When I first started earning money, it was in 2010 and I was in Nigeria. My first job paid well enough and I immediately jumped into the idea of investing. I thought it was a smart move to invest and I acquired a couple of stocks.
Within a year, my invested amount lost half of its value, and I was dumbfounded. Poor stock picking coupled with zero knowledge and strategy left me in tears. I remember literally crying to my uncle who had introduced the idea of investing to me. Since then, I have made many more mistakes, and over time learnt what to do and what to avoid as a beginner.
Years after, a few of the stocks I bought tripled in price and I figured out that strategy and knowledge are indeed key. Below are 5 tips to help beginners have a great investment journey.
1. Avoid impulse investing. Now this sounds cliché, but seems almost risky to invest randomly without doing any background research on the company you are placing stakes on. Fine, the company may be making waves in the media as a top firm, but there are fundamental checks that should be carried out before placing your hard earned cash into the pool of another company. This was one of the mistakes I made back in the days. I invested in a popular magazine company and one year down the line, it filed a bankruptcy claim, and you can imagine the rest.
2. Take time to learn. Buy some books on investing, follow tutorial platforms like Yochaa, do online research on the basics of stocks and why some stocks excel and others tumble. By taking your time to learn, it is only a matter of time before you become market savvy.
3. Pick stocks wisely. The stock market is super volatile and you can never really predict the market accurately. Stocks are a great option and do not require a lot of capital. If you choose wisely, the returns in dividends are worth it. You don’t have to buy all stocks at once, you can buy one at a time while you research on others until you are comfortable enough to proceed.
4. Monitor the market. This is an investment that you are making, don’t just buy once and fold your arms forgetting about it. You have to monitor the market with current trends, learn to know if the price of your stock has increased or is less than your purchase price. By monitoring market trends and tracking your investments, you will know whether it is growing, and when to hold or sell off what you have acquired.
5. Start simple. Having made up your mind on what stocks to invest in and sure that all background checks have been carried out on the companies, it is a good idea to start with a small investment, possibly a N5,000 - N10,000 worth. This is because you may make mistakes at the very beginning, learn from this and adjust your strategy in due course. Nobody really wins from the very beginning as there are seasons of learning and growing.
Before you start building your investment portfolio, make sure you are out of debt and emergency funds to fall on for a particular period of time. If you are new to the investment game, it is always a good idea to work with seasoned analysts who would be happy to assist you on how to run a winning strategy. Give it a shot, the time is now.