When it comes to investing money, many people turn to the stock market to take advantage of the fluctuations in the prices of stocks and other securities that are characterized by attractive profit opportunities, but before entering this field, you must obtain the necessary advice and advice to achieve financial profit.
Writer Barbara Freedberg says in a report published by the Spanish site "Financas Persenales", that investing in the stock market - just like other areas of the economy - has its advantages, but on the other hand there are many risks and difficulties that you may face when you bet your money on one product or another.
The author adds that the worst thing that a person can do is to jump directly into the water without testing it, that is, without getting a comprehensive idea about the basic concepts and rules necessary to make the right decisions.
And she believes that the most important advice is not that which claims that those who fear loss and refuse to take risks should stay away from this field and not enter it from the beginning, but more importantly, that the investor should be motivated and ready to learn more in this field, and follow the steps of successful investors, such as billionaire Warren. Buffett, or the investor Mark Cobain, or Chris Gardner, who served as the inspiration for the movie "The Pursuit of Happiness" starring Will Smith.
The common denominator between all of these is that they followed the investment path, and were able to manage their affairs in a way that makes them earn money, and buy and sell securities at the right time.
The writer adds that some rush to enter the stock market without learning the basics, and they feel that people there speak a strange language about them, especially with the use of all technical phrases, symbols, abbreviations and names of indicators and exchanges.
Therefore, she says, it is important for the new investor to obtain advice and guidance, to understand the investment world and avoid a set of common mistakes.
1. Investing without a plan
One of the most important advice offered by wealthy people - such as Warren Buffett - is setting clear investment horizons and sticking to them, because the worst mistake a new investor may make is betting on short-term success, and acting out of ambition and desire to make a quick profit, which ultimately leads to a loss. everything.
So planning is essential, whether you want to invest your money, buy a house, go on a trip, or enroll in university for a degree.
2. Buy shares whose prices are up
Soon, newcomers in the investment world are driven to stocks that are characterized by good performance, and this is a mistake that must be avoided, as these rising stocks are the most dangerous, because buying them during their rise is a wrong timing.
Rather than being driven by this trend, successful investors prefer to analyze the market and place money in stocks that will thrive in the future rather than now.
3. Buying shares in one area
The author says that one of the most important investment secrets is diversification, meaning not to put all your eggs in one basket.
Therefore, it is preferable to distribute investments between multiple fields, in order to avoid experiencing a complete loss when shocks occur in the market, as what you lose in one area may gain through your investment in another area.
Do not overburden yourself with following news of investments and the economy daily, because that may make you tired and insomnia (Getty Images)
4. Ignorance of what is invested in it
No one is ready to give his money to a stranger who met him on the road and asked him for a million dollars, and whoever does not want to pay his money to strangers, he certainly does not want to put his investments in things he does not know, because in this way he leaves himself vulnerable to luck.
Therefore - the writer says - before entering into any field must be studied well, and obtain basic information before making any decision in it.
5. Purchase of shares based on recommendation
When it comes to stocks, some do not hesitate to praise the performance of certain stocks.
Many fall into the trap of hearing the opinions of a friend or relative of a successful stock market millionaire.
But in this case, one must remember the wisdom that says that a mentor never loses, and this is in normal life and in investment as well, as the investment opportunities that suit a particular person may not suit another person.
6. Follow up on investments daily
The author says that this behavior may seem very attractive, but it is not a good idea to watch the news of the economy and developments in the world of the stock market continuously, as the daily developments are full of fluctuations, because the stock exchange is affected by all kinds of news, whether it is a rise in oil prices or a flood that has destroyed agricultural crops Or decisions to raise interest rates.
And constant monitoring of such fluctuations may make you restless and tense.
Instead, experts advise checking your investment news from time to time, that is, every 15 days, for example, or once a month.
It is always recommended to keep an amount of money to enable you to cover your needs in times of emergency (Getty Images)
7. Neglecting the emergency fund
Despite the attractiveness of investments, it is always advisable to keep an amount of money that will enable you to meet your needs in times of emergency.
According to the US Securities Commission, investors should have at least 6 times their monthly income, in the form of savings in a bank account.
8. Not to put a cap on buying and selling
Whether the investor is going through a profit or loss period, he must draw certain limits for the amount of shares he can trade in.
This limit may also be the maximum price he is willing to pay for the share.
9. Invest without an exit plan
If the investor did not specify from the beginning the strategy that would enable him to withdraw from the arena with limited losses, then he leaves control of his money to the emotions and mood swings that he may experience, which makes him make bad decisions.
There are several strategies, such as setting the maximum loss tolerance or the maximum profit required, which is something you should include in your investment plan.
10. Ignorance of fees and expenses
The author asserts that every investor should know exactly the fees for transfers and stockbrokers.
For example, there are those who charge a commission that drops to 3%, but you can dispense with this commission if you decide to enter the world of stocks yourself on the Internet and carry out the buying and selling operations.