5 things to avoid when investing in stocks

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No matter what the season, investments are always a good idea. You’ll want to grow the money you have by making it work for you, and one of the most common ways to do that is investing in stocks.

But before you start pouring your money into different stocks in the market, it’s best to make sure you know exactly what you’re doing. Stories of people making profits with large one-way bets and winning moves in the market make investing sound easy and effortless, but the truth is, successful investing comes from a lot of patience and research.

You must try to avoid certain tendencies and temptations when investing. It’s easy to lose control and even easier to lose a lot of your finances when you overextend yourself in the market. Fortunately, EastWest FVP and Head of Trust and Asset Management Group, Raul Victor de Guzman, is all too familiar with these investing mistakes with his extensive experience in the field. “You may think you’re right, but the market is never wrong,” says de Guzman.

He shares five common mistakes to watch out for in order to improve your chances of success when investing, especially if you’re quite new to the stock market.

Mistake Number 1: You let your emotions decide

It’s really easy to panic or get greedy whenever you look at the market at any given time. It could result in quickly selling losing stocks or holding on to winning stocks longer than you should. Doing so might minimize your profits. It’s best to be rational and steady your hand. “When investing, you should be very objective and call a spade a spade” advises de Guzman. “Never fall in love with your stock position.”

Mistake Number 2: You don’t understand what a company does

While you can technically invest in any company listed on the market, it’s also your responsibility to understand what the company does and how they make money. Not doing this due diligence can end up in a lot of wasted investments, costing you your hard-earned money. De Guzman suggests that you should be at least able to understand the industry that the company is operating in and be able to explain how the company is making money before you begin investing in it.

Mistake Number 3: You don’t diversify

The best portfolio is a diversified portfolio. As long as you have the resources, it’s always a good idea to spread them out over various issuers, sectors and even asset classes. Depending on how much time you can spend monitoring and managing your own portfolio, as a general rule, try not to invest more than 5% to 10% of your money to any one investment. “Don’t put all your eggs in one basket,” says de Guzman. “Collect, then select.”

Mistake Number 4: You overdiversify

Although diversification could be good for your portfolio, overdoing it may hurt your long-term returns. The trick is knowing enough about the market so that you can make strategic investment plays that would generate consistent returns over time. “Too much of a good thing can’t be all that good,” says de Guzman.

Mistake Number 5: You’re not patient

A lot of stories of investment wins seem to promise a lot of money in a short period of time, but that’s actually the exception to the rule. Getting good returns on your investments take a lot of time, and anyone who promises you a get-rich-quick scheme is usually a recipe for disaster.

“All great things take time and commitment to build,” says de Guzman. “When investing, the amount of time you spend in the market is better than trying to time the market and pick the market highs and lows. Rome was not built in a day.”

Fortunately, you don’t have to make your investment decisions alone. A bank like EastWest has experts and advisors who can help you reclaim your life and help manage your finances by investing the right way. EastWest can help you choose a diverse set of investment products which are consistent and suitable with your risk profile and designed to make your money work for you to generate the returns you deserve.

To know more and get started on investing with EastWest, visit your nearest EastWest store or visit the EastWest website today.