The assets of stock market can assist you to grab your financial goals. It’s possible provided that you are raring to reach your goals by hook or by crook. By the way, investors often fall into following pitfalls:
Absence Of Specificity In Your Goals
The desire to earn $1 million dollars which will be spent during retirement period, or the desire to have beautiful house is not actually your goals; they are all showing the ultimate result of your target.
You need to have a quantifiable investing plan in which you will be able to obtain a certain amount of money within a fixed timeframe. For instance, if you have a commitment to earn $100,000 within next 6 years in order to pay the initial instalment on the house, this can be regarded as specificity of a goal.
Unluckily lack of setting any particular goals will ultimately result in following shortcomings.
You will be unable to know whether to make any change of your portfolio or contrive different strategies (excluding the existing one) to grab your goal.
You will be unable to take proper decision of investment. This is because without goal, you will be unable to know whether to sift through the bonds and stocks.
You will be unable to weigh up the risk factors to the fullest extent because if you do not have any long term target. You may fall into trap of gambling, and count losses with the investment.
Investment Without Savings
Investing without leaving any savings or investing the savings has negative repercussions. What will you do when you will face any emergency situation? If you want money, you will get the money urgently either through the sale of investment or borrowing loans.
However, borrowing loans will actually take you away from the purpose of investment. Because you can grow 9% from your Exchange Traded Funds (ETF), but it cannot be compared to the credit card’s 24% interest.
In fact, you should carry your effort on raising emergency fund by amassing you income of six month. By this way you cannot easily exchange your assets. If any emergency situation springs, it won’t be indispensable to compensate the loss by selling your stocks.
If Investment Products Are Not Monitored Properly
As employees must fulfill the performance indicators set by employers with a view to justify their salaries, you should follow the investing approach analogous to this.
Sometimes, you have to swap the stock when they are not performing well. For instance, you need to accrue 7% returns annually so that you can reach your goals, but your invested products are not doing so up to the level. In this circumstances, the best way is to exchange the existing stocks for better ones.
So you should keep an eye on your products invested time to time. If you are not doing so, you are on risk of counting depreciating rate of your stocks that are gradually decreasing your money.
Assuming Financial News As Financial Advice
Remember financial news set out for news can never be chosen as financial advice. The news gives the sense of the condition of stock market but it cannot cover the other dimension of it. Ideally when you get the present conditions of stocks, bonds etc., the changes may have expired in the meantime.
So when you get the news of a stock rising, you may buy high after checking it out. You should also be aware of the newsletters or magazines advertising investment products, that you are motivated to invest in. This type of information is never distributed free of cost.
Impatience About Your Investment
No quick way of becoming rich is there in stock market. For fresh investor, it is very annoying to adopt the strategies that depend on a blue chip stocks or purchasing index funds. In this case, they would like to get fast fund trades with respect to the market.
This way can make money faster, but it is also responsible for quick loss of money. If you want to get success in this game, you have to take the right decision of purchasing and selling on time. This is as like as the flip of a coin. If you want to win, you must guess correctly.