Investment habits to avoid

We save money from time to time but we fail as investors, as we do not invest properly. I have noted some points which we should avoid if we want to move from savers to investors.

-    Too young to plan for retirement – A person is never too young to plan for retirement. In fact the earlier you start the lesser you would need to save and you would have more money in hand both at the time of retirement as well as when your income starts increasing. You might reach a stage where you would be able to pursue your dreams and not run after money lifelong.

-    FD’s are the best – This is one of the greatest myths I have ever heard. But if you look around, 90% of the people invest in FD’s only. FD’s give you fixed returns, but they never beat inflation. They are safe but not the best.

-     Equity is for savvy investors – If you feel so, you are not entirely wrong, but you have options. You can get knowledgeable persons to do the investment for you, this is achieved using the mutual funds route or take the help of financial planners.

-     Equity can give quick returns – Many persons whom I try to ask to invest in mutual funds, ask me for tips to invest in Equity market. They all feel that Equity market is there to make a quick buck. Equity market is not a gambling den, when you purchase a stock you indirectly become a part owner of a company. This was the basic we learnt when we went to college, but we have all forgotten this basic, In the Equity market there is money to be made, but not quick money.

-     Timing is the only way to make money – If all of us were able to predict when the market would go up or down, there would not have been poverty. For investment there is never a high or a low. If you think the company would do well for the next 5 years, invest. Do not wait to time the market. If you are still sceptical, invest small amounts on a regular basis, this will help average the costs. But here again stay invested for the long run.

-     Invest in sectors which are good today – This is a good strategy, but what would happen a few years down the line. Therefore it is better to diversify and invest in 3 to 5 different sectors. Returns might come down a bit, but you would not lose too much if the market falls.

-     Tax saving is the best investment – The best option is to invest in such a way that even after you save taxes, your goals would be met.

Just avoid the above habits and rest assured, you would be on your way to successful investment.