With stock prices falling rapidly due to the global pandemic, it could be a good opportunity to enter the market with less capital, but first-time investors should beware.
These are three of the biggest mistakes that new investors make – and how to avoid them:
- Going in completely blind
Jumping into the stock market without having any prior knowledge is not wise. Inexperienced investors taking high risks are most likely to lose capital. Watch, learn and practice before investing any money.
You should be doing your research, gathering an understanding of how the stock market operates and learning key terms before jumping in.
- Not doing your homework
The need for research extends through to individual companies. Some investors don’t spend enough time doing their research on some of the businesses they invest in. By researching particular sectors and trends, you’ll gain insight into what companies are generating value, and those you should steer clear of.
And for those investors who can’t commit to ongoing research, then copying someone else who does may be the better route for you.
- Investing more than you can afford
Also potential investors need to understand that the stock market is not a get-rich-quick scheme. Investors should adopt a long-term investment mindset and only invest what they can afford to lose if markets don’t perform as you had anticipated.
High-risk mindsets held by inexperienced investors can result in losses.
This is especially so in the global pandemic, with markets having been extremely volatile.
If you are looking to get rich slow, then get in touch with one of the advisers at the SWU Group on 02 9211 0228 today.