Making mistakes while investing is obvious and it’s a part of learning too. But there are some mistakes which are often repeated by investors. Let’s find out the most prominent mistakes made by the investors which can ruin their personal finances:

1. Lack of knowledge about Personal Financial Planning:

Unfortunately, investors lack the basic knowledge and understanding when it comes to investing. Having basic knowledge help you avoid losses and get out of any unwanted situations. Many investors gather information about the various financial products and money management tools through online sources like financial websites, apps etc.  and apply this knowledge while investing their money. However, they fail to understand that this information is very generic and not customized to their current financial position and financial goals. In short, this information is not shared with them in perspective and thus, can not be relied upon for ‘Personal Financial Planning’. 

2.Investors are unaware of their own personal goals/needs: 

Often, investors invest without any proper financial goal in their mind. They just invest by seeing gains/profits, or on the recommendation of friends/colleagues/relatives, or to get tax deduction.

investing without goal is like traveling without destination. Deciding goals makes investing easy and also helps in keeping track of your investments.

3. Investors do not want to pay for seeking financial advice:

Many investors avoid seeking financial advice because they do not want to pay the fees of Financial Advisors. Internet is full of free information and tons of apps today, but as said earlier, this information is very generic. And being generic, this may not compulsorily suit every individual’s  personal goals and financial requirements. This is also a major reason as to why the investors get easily misled by few agents or intermediaries. A good advisor can identify your financial situation and help you reach your goal. He/she can also save you from making mistakes and losses.

4. Lack of self-healthy financial habits:

Financial habits like regular savings, disciplined investment, budgeting, etc. are the key factors of successful investing. But investors ignore these and do not take the initiative to plan for their financial future.

5. Tax planning:

Many a times Tax planning is not important to investors. You can see people rushing for ULIPs or ELSS funds during the end of the year or before tax filing. Also, most of them will have their tax planning only limited to the 80 C/home loan deduction. Majority of such investors are unaware of other products which can help them take advantage of tax deductions. They just fail to understand that tax planning is not limited to year end.

5. Do not understand the difference between various asset classes and their returns: 

When it comes to investing, the investors are more inclined towards “profit.”. Young or new investors invest in equities or mutual funds with a view to earn more profit in the short-term. Today, many traditional investments are avoided due to low-interest rates. But it is important to have debt/interest instruments in your investment portfolio to get assured returns and accumulate money for long-term goals like retirement.

This is where expertise can play a great role! Financial Advisors are experts in planning your finances and help you meet your financial goals the way you want! Contact a financial advisor and seek his advice before you make any investments. After all it is your hard-earned money and you have every right to invest it the right way!

Above article is based on one of the Quora answer by Gayatri Jagdale