5 mistakes that could cost investors dearly in 2023

Investing in the stock market is definitely the right decision, especially in the current situation. There are only a few comparable investment opportunities that have similar earning potential. A classic savings account, popular with German citizens, has gained in earning potential in recent months, but it is certainly not comparable to stock market investments. Some banks have recently raised the interest rate on savings accounts to around 1%. However, there are a few things to consider when investing in the financial marketsthat the potential is exploited in the best possible way and that a loss can be avoided. the 5 biggest mistakes I introduce you to the establishment in the next article before.

1. Low diversification

someone who low portfolio diversification often leads to poor performance. Investors often make the mistake of only investing in the industry they work in or know best. Alternatively, some investors only focus on certain countries, such as their own home country or a few stocks. If a repository is aligned to such a focus, it’s high risk of loss.

An example of this are shares of real estate companieswho has a restrictive interest rate policy massively lose overall value. We are currently experiencing such a scenario in the market. The situation is similar with a focus on countries, with Russian stocks being an example. Moreover, there is always the risk of a total loss with a single action. The sudden insolvency of Wirecard or various companies in recent months clearly reflects this risk.

It is advisable to always think outside the box Always broaden your investment horizon and diversify your portfolio. ETFs such as MSCI World or S&P500 can be used for broad diversification. These ETFs provide broad diversification and significantly reduce the risk of long-term loss.

2. Too many trades

It usually starts with the first successful trades. As a result, the desire for more success increases rapidly. For this reason, trades in a wide variety of stocks are increasingly being opened and closed in an effort to clearly beat the market. However, these performances can rarely be maintained in the long term.

Each purchase and each sale must be carefully studied. Deposit Adjustments are in the best case only be made as soon as more money is available to invest, must be reallocated in the portfolio or the risk allocation must be changed. You should refrain from making other transactions when investing in the stock market, because in most cases, the long term is the key to success.

3. Create without planning

In the media is often and gladly reported on various current affairs, as well as in the circle of family and friends or between colleagues. Terms such as cannabis, solar energy, hydrogen or biotechnology or the names of certain companies come back quickly. Many small investors often tend to do this afterwards Investments in industries and businesses, without becoming intense with the industries and companies themselves having treated. The same goes for expert forecasts, which should never be followed “blindly”.

Crucial for stock market success is a clear investment strategy. If you are investing in a new industry, a new financial product or in a company, intensive research and discussions are necessary beforehand. Moreover, the new investment must correspond to your own investment strategy. An investment strategy does not have to be completely reinvented, in history to have various strategies to the plant proven for many years.

4. Emotions in trading

payment difficulties Emotions in trading are never a good trait. Private investors often tend to invest in companies for which they have a particular liking. The reasons can be varied, for example it is your own employer, a brand that you like to buy yourself or represents a status symbol. For a number of people, Mercedes-Benz or Porsche is such a status symbol that is associated with a lot of emotions.

the emotions Promptly entice you to buy the shares of the company, whether or not the sober facts and your own investment strategy fit into it. From to sell such sharing is just as difficult in these cases, although many facts speak in favor of a sale. The result is that the stock is not sold and is kept in the portfolio.

stock market decisions so should never with emotions to be in relationship. Any decision to buy and sell assets must always be based on pure facts and therefore on a well-founded basis for decision-making.

5. Waiting too long to start

Buy now or would you rather wait a few more days for the price to drop further? Many small investors regularly ask themselves this question. It is not uncommon for this to mean, for example, that the stock is never bought or is bought at a significantly lower price.

If a stock has been correctly analyzed and fits perfectly into the investment strategy, you should not wait too long before buying it. In the worst case, a personal price limit is set slightly below the current rate, which is never reached. As an investor, you must therefore get rid of thought, always hitting the perfect entry point. If the investment strategy is designed for the long term, it does not matter whether the share is bought at the price of 84 or 83 euros.

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Every transaction is risky. No guarantee of winning. Any content on our website is for informational purposes only and does not constitute a recommendation to buy or sell. This applies to assets as well as products, services and other investments. Opinions expressed on this site do not constitute investment advice and independent financial advice should be sought where possible.

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