Small investors should avoid these mistakes

Investing in unknown stocks

Never buy stocks of the companies you have never heard about. Instead prefer buying penny stocks. Research performance of such penny stocks on sites like moneycontrol.com and read experts review and participate in community discussions. This will give you a fare idea of the stocks and in turn help you in meeting your financial goal

Compare themselves with mutual funds

Remember mutual fund companies employ highly skilled financial geeks and their main job is to make money for you. So your ideology to think that I’m better than fund manager is a very big mistake especially when you rely on your own guts and lack market knowledge. Also see benefits of investing through SIP

Limited portfolio

Always spread out your portfolio. Putting everything in one bucket increases risk as decrease in stock price directly affects your returns. Unlike mutual fund where your money is invested by professionals in number of stocks, if you are thinking of investing on your own then research stocks properly and diversify it.

Lump sum investment

Investing lump sum amount in one go should always be avoided. Always keep a wait and watch approach and remove from your mind that the stock price will never go beyond this limit. Every good stock will go down and then rise up.

Follow brokers advice blindly

Remember, it’s your money!! No one else will ever bother about it more than you. So never blindly trust on brokers. Because they earn money via brokerages. More the money they succeed in getting out from your pocket, higher is the brokerage they earn.

Buying at incorrect time

Small investors enter the stock when it is at a all time high by keeping hope that it will further rise further. And this sometimes shots back because market sentiments can go negative even with a small news.