Barriers To Get Rid of for Successful Investing in 2018
We have often heard the saying, “Beautiful things start to happen when you distance yourself from the negatives.” The same applies to everything in life; whether it is the things that you have collected at your home, the people around you, the thought process that you follow, or even the investments you make.
It is seen that investors take their decisions by letting their emotions, rumors, or feelings of greed play on the front foot. And, as a result of which they end up losing their money that they could have invested in something more rewarding. Regardless of the failures, some people choose to dance to the same old tune and end up getting disappointed.
Removal of such barriers is crucial to be a successful investor. Although different people might have different setbacks, it is essential to identify them and get rid of them to avoid making the same investment mistakes again and again.
Listed below are some of the barriers that we often find our investors struggling with. Let’s learn more about them and also ways to deal with them in the upcoming new year!
- Decisions Based on Emotions
Let’s face it, investing is a hard nut to crack and being human makes the process even more complicated. Even the most proficient investors feel trapped in cognitive biases and give emotional reactions to portfolio volatility, whether it be fear of loss or confidence of gain. There is no denying the fact, investing without emotions is easier said than done. Thus, the investors should avoid both euphoric and depressive investment traps in order to prevent from making the poor investment decisions and further cause loss of money.
For instance, the secret to buying is when the market is low, and selling is when it is high. However, some investors don’t prefer selling rising funds and hate purchasing the falling ones. Besides, they prefer holding on to the winning investments for too long, and as a result, they lose them too. The story doesn’t end here, as the investors still carry on with the ex-performers in the hope of better returns in the future. This reduces their account balance and increases their stress.
- Lack of Financial Literacy
Many novice investors believe that they just need to buy and sell the right scheme in order to make good returns. They have little knowledge of how this investment process works, and thus they often overestimate their ability to beat the market and as a result take unnecessary risks.
Some of them are irresistibly drawn due to the strong performance of a mutual fund, even if it’s not sustainable. Chasing the latest hot sectors without considering its merits and demerits often lead investors to bigger troubles.
For instance, as most of the investors know that they should not invest a big amount in just a single scheme, yet they continue to do so. They buy large number of units of a single scheme, and this makes their portfolio lose diversification.
Many people become too much focused on the day-to-day returns as the market goes up and down. They are swayed when the markets face volatility and do away with investing. However, due to impatience, they distance themselves from the probability of winning their financial goals.
According to the experts, it is important for the investors to keep an eye on their investment objectives and even the overall portfolio. Being considerate about the investment risks that one can handle is a wise choice, but overestimating the effect of the short-term fluctuations is something that should be avoided. It’s rightly said that “Every cloud has a silver lining.” Similarly, a down market can also act as an excellent opportunity to invest at lower prices.
For the best results, keep a check on your portfolio at least once a year and more frequently when the market is volatile. With time, you may require re-balancing your portfolio to bring it in-line with your investment objectives and risk appetite.
Strategies to Avoid Such Barriers
As per our investment experts, discipline can act as a great antidote to the emotions that drive you from investing astray. It is crucial to follow a well-designed investment plan, for it can help you stay on the track of your financial goals.
Secondly, you can make use of rupee-cost averaging technique where you don’t have to keep track of your investment amount as the equal amount of rupees are invested at regular and predetermined intervals. This strategy works in all market conditions. You can choose to invest in SIP of an expert recommended funds to gain excellent returns.
Furthermore, prefer investing in different schemes and categories. This is a great method to diminish the emotional response to market investing. Introducing diversification in your portfolio will help you enjoy different flavors and also deal with a range of market conditions.
The Bottom Line
Don’t you feel that this New Year can be a wonderful time for you to reduce such financial hindrances from your life? If you nodded your head in affirmation, then we wish you a very good luck as this can be a tremendous financial resolution that you can make. In case you need any help in making your financial dreams come true, connect with us at MySIPonline. Here, we provide quality online investment services in the best of the bunch mutual fund schemes by a wide range of AMCs in India.
Last but not least, it’s time to overcome your fear of failure as it can be your greatest barrier to success. With this note, we wish you a very happy and prosperous New Year 2018.
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