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5 Investment impulses you must avoid

  • Highlights

  • Refrain from letting overconfidence rule your choices

  • Take smart investment decisions backed by research

  • Worry less by diversifying your portfolio with FDs

Investments are an important part of your personal finances and offer rewarding gains when done right. So, understanding the various financial instruments available to you and how the market functions, is very important.
Here’s a look at some common investment mistakes to refrain from:

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This helps you make your decision objectively and in a well-informed manner without letting emotions overwhelm you. While emotions might be a driving factor in other areas, they can become a hindrance when you are trying to build your investment portfolio. Allowing your emotions to rule over your financial choices can increase your risk of loss too.
So, take a look at the 5 emotions that you should be wary of while investing.

1. Being overconfident

Predicting results on pure speculation has led to the downfall of many investors. While you might think you know the market well enough to predict the outcome of your chosen investment, it’s always better to decide based on data. This will help avoid the chances of loss or failure. Rather than being overconfident, plan your portfolio taking the worst outcome into consideration so that you don’t take on too much risk in order to get the highest payout.

2. Making hasty decisions

Any decision made rashly is one that invites disappointment. In order to master the art of investing, you will need to set aside time to thoroughly analyse the market and understand its patterns and changes. While an impulsive decision may coincidentally work in your favour once or twice, the key to successful investment is patience.

3. Giving in to greed

It is likely that you will want to wait for more profits once you start receiving returns on investments like equity. However, it is important to rationally analyse the possibility by weighing the chances of incurring losses if you are too slow to divest. This may cause you to lose your capital and the returns already gained too. So, learn to determine when you need to take the sell call for your invested shares or when reinvesting your returns in the same scheme is not a profitable move.

4. Letting yourself be indecisive

Just like acting impulsively can hinder your portfolio, being indecisive or too slow to take action can affect your gains negatively. To tackle your confusion, read up online, talk to advisors or financial planners. Give yourself a strict timeline to take a decision so that you don’t lose out on rewarding opportunities or liquidate your funds before the value falls further.

5. Being driven by worry

Though a natural tendency, fear can have a negative influence on your investments by causing you to be anxious about potential loss or failure. Like indecisiveness, it can lead to you missing out on growing your wealth. Rather than let worry come in the way of earnings, create a diversified portfolio that takes your risk appetite into account. Invest in safe options like a fixed deposit and PPF, and then look to mutual funds to grow your savings.

Rather than letting emotions clog your investment decisions, surmount them by identifying which of these most affects you. This way you’ll be able to set aside the bias and create wealth practically and judiciously.

DISCLAIMER: The mentioned fixed deposit interest rates are indicative only, and may be subject to change periodically. Please check the interest rates on our website.

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