First Rule of Investing – Don’t Lose Money
There are 2 ways to have more money. The first way is not to lose what money you already own, through bad investments. According to CFA institute, here are the 10 fastest ways to lose money through investment: -
1. Buying investments without first establishing an investment strategy.
2. Buying high – performance chasing.
3. Selling low. Yes there are people who combined 2 and 3 to their detriment.
4. Unrealistic expectations.
5. Churning their investments. Switching their investments too quickly before they have a change to give returns.
6. Investing in individual stocks instead of creating a diversified portfolio of securities.
7. Investing in stocks instead of in companies. (There is a difference between the 2)
8. Investing based upon tips and sound bites.
9. Paying too much in fees and commissions.
10. Basing their investment decision on tax avoidance.
11. Not monitoring their investment i.e. neglecting their investment
12. Not knowing their real risk tolerance.
Before you invest, make sure you are not make these common mistakes.