Former 90s kids entering the investment arena make several mistakes while starting out. From investing randomly without a well-defined goal and on the advice of others to investing without market research and not having the patience to outwait short-term volatility, there are several investing mistakes 90s kids make when first entering the market. This article offers a comprehensive guide on the 5 common investing mistakes 90s kids make in hopes that you will learn from them and consequently avoid them.

• Investing without clear goals or a time horizon can result in poor investment decisions.
• Attempting to time the market and withdrawing investments due to short-term market fluctuations can compromise returns and result in losses.
• Overlooking diversification can weaken your portfolio against market volatility.

Some of the most common investing mistakes almost every 90s kid makes are listed below:
 

Investing without a clear goal or timeframe

This is arguably one of the most common investing mistakes the 90s kids made. Investment objectives and time horizons are the two most essential pillars that underpin your investment strategy and approach. A well-defined and time-bound investment goal dictates your investment mode and asset selection decisions.

For instance, if you want to save up for retirement that is 30 years away, you can invest in mid and small-cap funds. The 30-year investment window allows you to ride out short-term volatility and recover any possible losses along the way. However, if your goal was to save up for the down payment of a home, investing in short-term debt funds would be wiser since you might wish to redeem your investment in 2-3 years and desire capital preservation. If you are looking for a safe investment option, you can consider fixed deposit. They offer guaranteed returns and a fixed interest rate throughout your investment tenure.
 

Attempting to time the market

Believing in the fallacy of timing the market is yet another common investing mistake 90s kids tend to make. If you are still trying to implement this trick to time your investments, you should stop immediately. The act of timing the market is trying to predict market swings and planning to buy and sell trades accordingly. It is essentially the act of predicting market movements to capitalise on price fluctuations and make huge returns. However, timing the market is a futile exercise that’s hardly ever accurate or precise. Experts, let alone regular retail investors, have failed at consistently timing the market.

As an investor, you should understand that investing is a long-term game that hinges on patience and discipline. Instead of attempting to time the market, you should make trades based on your own investment goals, risk appetite, and time horizon. You must understand that trying to time the market is inherently risky because it can result in significant losses and missed opportunities. By remaining invested for the long run, you can ride out short-term volatility and avoid the pitfalls of timing the market.
 

Overlooking diversification

90s kids often prefer singular investment approaches, which results in losing out on the benefits of diversification. Overlooking diversification completely or failing to optimally diversify one’s portfolio remains one of the most significant investing mistakes 90s kids make. Unfortunately, a significant section of investors invest a large proportion of their corpus in just one or two securities. The problem arises when a particular security falls excessively, impacting the entire portfolio’s returns. Spreading investments across asset classes and sectors through diversification helps create hedges in your portfolio that prevent the adverse effect of any one security’s underperformance on the overall returns.

Financial experts recommend owning a good balance of equity and fixed-income assets in your portfolio. Equity and equity-related assets offer the potential for higher returns, while fixed-income investments like debt funds, bonds, and FDs balance the inherent risk of loss with equities while offering stable returns.
 

Investing without patience

Being impatient with investments is one of the gravest investing mistakes made by 90s kids. Withdrawing investments and redeeming funds at the sight of slight market volatility can turn out to be detrimental to your long-term financial goals. For instance, let’s assume you had invested in an equity fund with a medium-to-long-term perspective. After a few months of good returns, the fund’s NAV starts declining. You finally decided to sell the fund after a week when returns turned negative in an attempt to control the damage. However, a few months down the line, the equity fund starts recovering, offering returns at par with the benchmark index the next year. If you had held on to the investment for a year, you could have made 3x more returns on the same. The lesson here is that investment is all about patience and discipline. You should not rush to cash out your investment just because a stock or fund is falling. Short-term volatility is natural in the market. You simply need to weather these phases and control your emotions to make good returns in the long run.
 

Taking investment decisions on others’ advice

Many 90s kids make the common investing mistake of relying too heavily on other’s advice. They enter the world of investing with a lot of confidence and a positive attitude to earn profits. However, they make the cardinal mistake of investing based on other people’s advice. While seeking investment guidance is valuable, blindly following tips from friends and family members may not work in your favour. Investing without conducting personal research can lead to poor decisions. Recommendations from others may have worked in their favour but may not in your case due to your subjective goals, risk tolerance, and time horizon. It is important to assess your unique financial situation and build a customised strategy that fits your needs.

Investing involves a long learning curve, and making mistakes is part of the journey. While some mistakes are unavoidable, some others are common to 90s kids who are starting out on their investment journeys. Reviewing the 5 investing mistakes 90s kids make helps you intentionally work towards avoiding them and ensuring investment success. You can consider investing Bajaj Finance Fixed Deposit. With a top-tier AAA rating from financial agencies like CRISIL and ICRA, they offer one of the highest returns, up to 7.95% p.a.