6 Common Stock Market Investing Mistakes and How to Avoid Them

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Did you know that about 52% of adults in the United States have money invested in the stock market in some way, shape, or form?

Investing has risks and rewards. Some people view the risks as too high, while others believe it is better than not doing anything with their money.

So, how should you go about investing in stocks? Well, these are some stock market investing mistakes people make.

1. Not Diversifying

This is going all-in on one investment. Let’s say you invest in one stock at $100 a share and suddenly, it goes down to about $50 a share.

While this may not be likely, it is possible, and your portfolio can be damaged by not having enough investments in other assets to cover your losses on one stock that might go south.

One way that you can diversify more is to use foreign markets to increase your options. Resources like Monex are a good place to start there.

2. Timing the Market

A lot of people try to time the market to buy a stock at the lowest price possible when they are first starting out. While some people do this for a living, it is generally not recommended if you do not have the experience to back it up.

This can cause you to miss out on opportunities or even get you to buy at a higher price later because you have a fear of missing out.

3. Short-Term Thinking

When it comes to investing, this should be something that you are thinking about hanging onto for years, if not decades. If a stock takes a temporary dip for a month or two, you may give up on it and decide to sell before it has a chance at recovering.

If you sell after a 10% profit, you may not stick around long enough to see it become 100% profit if you do not approach it with long-term thinking.

4. Fees

Every resource has fees but obviously, some charge more than others. For example, one place could be charging merely a 1% fee while another place charges 5%.

Do your research and compare platforms before agreeing to pay more fees than you might have to.

5. Too Much Risk

Quite simply, do not put money into the stock market that you cannot afford to lose. Someone with $100,000 for example can likely throw $5,000 into the stock market and not miss it.

However, if you only have $7,000, perhaps throwing $5,000 into the stock market is not a great idea. Ask yourself if you would miss that money or need that money if it was gone tomorrow. If the answer is yes, do not put it in.

6. Not Investing

Finally, a mistake that some people make is just not investing in general. This can be people that are afraid to enter the realm that can afford to or people who have money in the stock market but can put in a lot more but missed out on some profit.

Do not be afraid to invest some of your money if you are doing the right research.

Avoid These Stock Market Investing Mistakes

These are six of the biggest stock market investing mistakes that people make. If you can avoid doing any of these, you should see a good return on your investment in no time.

For more information, check out our Finance articles under the Business section.