Ways to avoid ‘Investing mistakes

Being humans, we carry a lot of behavioural biases. This includes but it’s not limited to, optimism, confirmation, overconfidence and anchoring & recency bias. These behavioural biases often lead towards investing mistakes. It hurts not just your investments but also your financial goals. Hence, it becomes crucial to overcome such biases to avoid making investing mistakes. Now the question is-what are the ways to avoid making such mistakes? Not to worry! We have listed below some of the ways to avoid investing mistakes.

Market noise
Most of the people instead of focussing on their investment objectives focusses more on the market noise. For this, they sometimes rely on the news channels. Concentrating more on the market noise, often lead investors to take hasty decisions that may result in losses. Hence, it is better for the investors not to focus on the market noise. Rather, it would be prudent to review your investments quarterly.

Hire expert
These days, due to advancement in technology, people prefer Do It Yourself (DIY) investing. Although, from the cost perspective, this way proves to be cheaper but might often lead to investing in funds that neither suits your risk appetite nor your investment objective. Hiring an expert financial planner often helps you to avoid these mistakes. Financial planners would also help you to overcome your behavioural biases that often lead to such mistakes.

Keep things simple
Simplicity always reaps reward in the long-run, be it in life or in investing. Not complicating your investments would help you not just in lowering your cost, but also help you to lower your risk of over-diversification. People often feel that having 10-15 funds would help them in gaining more returns for lesser risks. In fact, it’s the other way around! Hence, keep your investments simple and invest in not more than five funds.