Avoid These Mistakes When Investing In Any Company
Companies / Investing 2016 Jan 26, 2016 - 11:53 AM GMTBy: Boris_Dzhingarov
It is normal to make mistakes when you invest in a company as this is a huge part of the learning process but you surely want to avoid making as many mistakes as you can. The first step towards that is obviously being aware of what these mistakes are. While we can easily mention many, let us focus on some that you can instantly avoid and improve your success possibility.
A Very High Margin
We can define margin as being using borrowed money in order to buy securities. You can easily make a lot more money when you use margin but losses can easily be exaggerated when you overdo it.
One of the really bad things that can happen as you are a novice investor is to be carried away with an opportunity that seems to be incredibly advantageous. For instance, you can invest in a promising company that has a great growth like Elisam Italy with the use of margin. However, if growth is not as fast as it would be needed to repay your debts, you can end up with financial difficulties leading to even more debt.
Always use margin in a sparing way, especially as a novice investor. Do so just when you completely understand all investment aspects of importance.
Trusting Unfounded Tips
This is a mistake that every single investor makes at least once in his career but novice investors do tend to make it more often than others as they trust family members or friends when they have a tip. During your investment career you will hear thousands of tips from people that you trust. If you invest based on every single tip that you receive, it is a guarantee you will end up losing money.
This mistake needs to remain in the back of your mind at all times, including when you hear tips coming from people that are highly experienced. You want to always research as much as you can so that you make investments that have a high chance of turning into a profit.
Blindly Taking Advantage Of Cheap Deals
Whenever you hear about a cheap offer, you want to be really careful. This is true for any type of investment that you would make from stocks to physical assets you would rent out. There is normally a reason why something is really cheap. Some investors will take advantage of this and make a huge profit but they will tell you that they are lucky if 1 of 10 investments of this type would pay out big.
When you opt for something that is really cheap and that can turn into a huge profit, you are faced with risks that are much higher than what novice and even some experienced investors can deal with.
Conclusions
All the mistakes that we mentioned need to be in the back of your mind. Many others can be mentioned and the really important thing you want to remember when you make any investment is that you want to assess risks and you want to research as much information as possible about the company you will invest in.
By Boris Dzhingarov
© 2016 Copyright Boris Dzhingarov - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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