What are the biggest mistakes investors while investing?
I am a novice investor, but I want to avoid the mistake other investors do when they started investing.
In my opinion, the biggest mistake is not having an emergency fund, or having a separate SIP for short term requirements. And not having insurance.
If you don't have these things, you'll treat your investments like your cash pile. You'll be greedy and spend more when the stock market is up and your money is growing. You will panic when the market falls and you have less money to spend - when you should not be selling stocks or MFs for your expenses in the first place.
There are lots of mistakes, I have made personally. To summarize every mistake in a single line would be in the words of
Sir John Tempelton - "This time it's different"
Here are a few from me first-hand :
- Trying to time the market
- Only investing in short term
- Holding on to the loss-making stock, in hope of reversals
- Underestimating losses, overestimating my profits
- Trading on news/tips from the Internet
- Giving in to the emotions (there are tons & tons of them - anger, greed, fear being on top)
According to me, the biggest mistake we make while Investing is:
1. Waiting too long to start.
2. Not investing when you have enough resources and the best advisors in place with you.
3. Getting influenced by the headlines and news.
4. We don't possess the required knowledge and experience to make consistently good decisions.
The best time to invest was 20 years ago and the next best time to invest is now.