Investment is a crucial part of your financial planning. However, wrong moves and mistakes can affect your long-term corpus that you are aiming to accumulate at the time of retirement.
In this article, let’s examine four investment mistakes that you better avoid for maximising your returns:
Haphazard financial planning
This is one of the most common but big mistake that most investors make. When it is about your hard-earned money, there’s nothing bigger than financial planning. In fact, it is only through proper financial planning that you can get a stronger yield from your earnings in the long term. On the flip side, if you don’t plan your finances properly, you can potentially jeopardize your overall investment strategy. Thus, make sure you have a proper financial plan in place. Ensure you perform a risk analysis to understand your risk propensity, which is crucial for finalizing your asset allocation strategy into long-term and short-term investment options.
Failure to realign existing portfolio
Yes, all of us keep a regular watch on our investments. However, how many of us actually realign our portfolio to meet the market requirements. Realignment is no rocket science. It’s just the art of getting rid of all the non-performing stocks in your portfolio and replacing them with new performing stocks. This is one of the most crucial things you need to do to get the most out of your existing portfolio.
Not looking to increase income avenues
Many of us are guilty of being happy with what we are earning. Every now and then it is important that we step out of our comfort zone and look for avenues of increasing your existing income. This could include taking part time work, going for better paying job, or by running a parallel business option. As you are younger, you will have higher risk appetite, which will allow you to diversify your income sources. This will change as you grow. Please remember that higher income means more savings. Further, more savings means more investment. Simple as that!
Improper market and financial research
Today, information pertaining to company’s finance is publicly available. Thus, it is crucial to read as much as you can about the stocks before investing. If you avoid preliminary research, it can lead to potential loss of capital, especially in the long term, which is not what you want. Therefore, you are advised not to invest in equity markets without proper research on the company’s finances, stock performance, company history, and all the crucial financial ratios. This research will help you take well-informed investment decisions.
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