{"id":1434,"date":"2023-12-22T06:14:11","date_gmt":"2023-12-22T06:14:11","guid":{"rendered":"https:\/\/shanthalachits.com\/investopedia\/?p=1434"},"modified":"2023-12-22T06:14:13","modified_gmt":"2023-12-22T06:14:13","slug":"5-critical-investment-mistakes-to-avoid-2-2","status":"publish","type":"post","link":"https:\/\/shanthalachits.com\/investopedia\/5-critical-investment-mistakes-to-avoid-2-2\/","title":{"rendered":"5 Critical Investment Mistakes to avoid"},"content":{"rendered":"\n
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Investors are a varied lot, with different backgrounds, different priorities and different financial goals. Small household investors may look to invest in long term schemes for securing their children\u2019s future. Senior citizens would want to augment their monthly income with returns from savings. A young adult with the thrill of his first job may look to invest his surplus income in high yield, highly speculative instruments like IPOs, cryptocurrencies. Business owners may want to invest their revenue surplus in safe, short term funds so that the money can be ploughed back into their business when required.<\/p>\n\n\n\n

Whatever be the motivation for financial investments, there are some common pitfalls that all categories of investors must avoid. Putting in your hard earned money into a monetary instrument is like handing over your baby into somebody\u2019s care. We must ensure our money is placed in the right place.<\/p>\n\n\n\n

#1 Jumping in without a plan<\/strong><\/p>\n\n\n\n

Investments must be goal oriented and properly timed. Short term investments must have high liquidity and may yield only moderate returns. Medium to long term investments can focus on growth and consolidation. Specific milestones such as a daughter\u2019s higher education, a business expansion plan can be mapped out with clearly identified investment choices. Investing in an ad hoc manner, without clearly working out our goals, final returns expectations, tax implications, security, liquidity, fluctuations, investment tenure etc is a recipe for trouble.<\/p>\n\n\n\n

#2 Herd behaviour \u2013 blindly following others\u2019 investment choices<\/strong> <\/p>\n\n\n\n

What investment route works for you may not necessarily work for me. An example will help to illustrate this point. Just because a few of my friends are buying IPOs in the stock market, I decide to do the same. Under peer pressure, I decide to buy any IPO that gets listed. At the time of listing, I realize that my IPO purchases are listing well below the purchase price! Only those company IPOs which have a good, healthy balance sheet and positive growth prospects in the future are good bets. And this information can be obtained only by studying the company performance and making an objective evaluation. \u201cI missed the previous IPO which my friends bought, so let me pick up the next one\u201d is a bad strategy, and must be strictly avoided. Make your own informed choices, do not fall for hype or mass frenzy. There are many investment Gurus who may appear on TV or on online platforms and give recommendations and tips. Take any such advice only after thoroughly verifying it.<\/p>\n\n\n\n

#3 Blind intuition or speculation rarely yields results<\/strong> <\/p>\n\n\n\n

Investment planning is not a guessing game or a gut feeling. It involves discipline, loads of research and homework. And then finally it requires cool objective decision making. Many investors try their luck with small cap funds in the stock market out of blind intuition. Some people speculate on property prices and assume they always grow astronomically. Sixth sense is a very bad aid to investing. It might work once, and its often called beginner\u2019s luck in the gambling parlance. But that is exactly what it is – just a gamble. Proper financial investing is hard work.<\/p>\n\n\n\n

#4 Putting all your eggs in one basket<\/strong> <\/p>\n\n\n\n

The world around us is a very dynamic and fast changing environment. Gold prices continuously rise for a few years and then a sharp fall begins. Stock markets have their own fluctuations. Interest rates for deposits were very attractive until a decade back, now they are very low. Since it is hard to predict which financial instrument will thrive at what time, we must be flexible and broad based in our investment strategies. This will minimize our risk of failure. When one instrument is down, the other will pull up our financial position. And the choice of instrument is also a dynamic one \u2013 investors must continuously evaluate their investment options and rearrange their investment portfolios to suit the present financial climate. Keeping all your money in one instrument is sure recipe for failure.<\/p>\n\n\n\n

#5 Greed never pays<\/strong><\/p>\n\n\n\n

Most of the safe investment routes in India are known to yield between 5-12% returns year on year, based on historical data. Bank deposits, Mutual Funds, Gold, Chit funds, property are some of the common options. Of course there will be exceptions in these categories too, but by and large they are safe and reliable instruments with moderate returns. However, some investors fall for dubious and high risk instruments in the hope of getting extraordinarily high returns. Fraudulent ponzi schemes, speculative crypto currencies, online betting are some such dangerous examples. While unregulated ponzi schemes may offer as high as 18-25% annual returns, they are the ones which cause large scale losses to investors when they go bust. In contrast, a safe and approved Chit Fund house like Shanthala Chits is registered with the Government of Karnataka. We clearly inform our investors that our chit schemes have been yielding 7-10% returns historically. So there is absolute trust and security for the investor\u2019s money.<\/p>\n\n\n\n

ABOUT US<\/strong><\/p>\n\n\n\n

Shanthala Chits<\/strong> has been in the business of chit funds for over 2 decades now. We are a Government approved chit fund company with a 25 year successful track record and thousands of satisfied customers. Shanthala Chits is registered under the Chit Fund Act of 1982, Government of Karnataka. We are one of the most popular chit fund houses based out of Bengaluru, known for our customer satisfaction and secure investments.<\/p>\n\n\n\n

Our Chit schemes range from a monthly contribution of Rs 6000 to Rs 1,00,000 to suit every budget. You can pick a chit scheme with an appropriate monthly instalment for meeting several of your short-term financial needs. Our chit schemes are for a tenure of 25 Months.<\/p>\n\n\n\n

Get in touch with us and start with an investment scheme. We will be glad to help you out with the right scheme that matches your needs.<\/p>\n","protected":false},"excerpt":{"rendered":"

Investors are a varied lot, with different backgrounds, different priorities and different financial goals. Small household investors may look to invest in long term schemes for securing their children\u2019s future. Senior citizens would want to augment their monthly income with returns from savings. A young adult with the thrill of his first job may look […]<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[28],"tags":[],"class_list":["post-1434","post","type-post","status-publish","format-standard","hentry","category-personal-finance"],"_links":{"self":[{"href":"https:\/\/shanthalachits.com\/investopedia\/wp-json\/wp\/v2\/posts\/1434","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/shanthalachits.com\/investopedia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/shanthalachits.com\/investopedia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/shanthalachits.com\/investopedia\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/shanthalachits.com\/investopedia\/wp-json\/wp\/v2\/comments?post=1434"}],"version-history":[{"count":1,"href":"https:\/\/shanthalachits.com\/investopedia\/wp-json\/wp\/v2\/posts\/1434\/revisions"}],"predecessor-version":[{"id":1436,"href":"https:\/\/shanthalachits.com\/investopedia\/wp-json\/wp\/v2\/posts\/1434\/revisions\/1436"}],"wp:attachment":[{"href":"https:\/\/shanthalachits.com\/investopedia\/wp-json\/wp\/v2\/media?parent=1434"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/shanthalachits.com\/investopedia\/wp-json\/wp\/v2\/categories?post=1434"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/shanthalachits.com\/investopedia\/wp-json\/wp\/v2\/tags?post=1434"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}