There are many articles, videos which tells about things, investor should do before and after investing. But in this article, we are going to find out about the things which investors should stop doing:

• Waiting for right time to start investments

There is no ‘perfect time’ exist. do not wait for the right time to start investing or to enter the market.  In investments, time has value and therefore do not waste this valuable time while looking for right time.

• looking for ‘best’ product

Investors often ask for best mutual fund, best insurance, best stock etc. Like point no. 1, There is actually no best investment options, but there are suitable options of investment as per investors goal, risk, age, duration of investment and few other requirements.

• Considering insurance as an investment

Insurance is not an investment. Insurance is a risk management tool, which can be used in order to transfer the financial implication of a possible loss. The insured incurs an expense which is known as premium. It is a small amount spent (an expense) to protect and safeguard themselves or their families.

• Locking money in illiquid assets:

Like investing money in real estate. It’s not only locked the money unnecessarily for long term but also increases the risk factor due to low liquidity.

• Complicating investments:

Investors often complicate their investments by adding too many funds/stocks/plans in the portfolio or by investing in name of relatives in order to save tax or for high returns. Keep your investments simple, manageable.

• lacking to diversify

Diversification is not that easy like having a portfolio of mutual funds with 1 mid cap, 1 small cap, 1 multi-cap 1 large cap.  Diversification also means to have right co-relation between assets and having asset allocation on the basis of investors risk profile. Additionally, it’s important not to over diversify by adding more fund/stocks to the portfolio in view to get more returns.

• Product comparing

Product comparison is obvious when you have ‘N’ number of options available. Though before doing that make sure you are comparing product/asset class with its peer or plan which belongs to same asset class. You cannot compare ULIP to mutual fund ELSS just because both gives tax benefit u/s 80 C.

• Investing in order to save/avoid tax

Ignoring tax implications is not wise but investing in different plans and schemes just to save tax can lead to a mess and unmanageable investment portfolio.

• Investing without a goal 

More returns or getting rich is not a goal. Make sure to have a measurable and practical goal before starting any investment.

• Investing on the basis of media/ news

Invest with a plan and on the basis of your investor profile. Avoid investing on the basis of recommendations from colleagues/friends and noise/ stories around you created by news/ media.

• Investing in ULIPs

One of the leading product mis-sold under the tag of ‘tax benefit and high returns’. But in reality, such investment schemes with insurance cover neither give benefit of insurance nor investment.

• Bonds/FD’s offering high rate of returns

Such FD’s or bonds often come with high risk as they have low credit rating. People invest in such FD’s/Bonds to get high returns than bank FD’s without looking at the plan details, ratings and associated risk.

•  Not learning about personal finance

Learn more about personal finance, ask questions, understand the product before investing. Learning about personal finance can save you from losses and mistakes.