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Saturday, August 7, 2010

Stock Investing - Things to avoid

Stock investing is not that difficult as is pretends while seeing the volatility, The thing which it requires is sheer analysis, but still after making good decisions you can be on the loosing side, this may occur due to high fees which you have paid to your broker or some other trap.

So the most important things to avoid while stock investing are following:

High fees: A common investment trap is simply paying too many fees. These fees may be incurred by investing in a high fee mutual fund (such as a mutual fund with a load) or paying too much in fees to your broker to trade stocks. For example, if you do most of your stock trading over the phone or in-person instead of through the Internet, you are likely paying way too much in fees. Another way people pay unnecessary high fees is buying "investment advice" that they really don't need and likely does not help them.

Fear and greed: Books can be written about how fear and greed destroys investors. Most investors buy high and sell low. They buy after everyone else is buying and sell when things look glim since everyone is selling. This is a natural byproduct of human nature, and unfortunately, the exact wrong way one should invest in the stock market. Most people that actively watch their stocks have much worse returns than people who just leave their money in index funds since the market watchers get consumed by fear and greed and trade too often and at the wrong times.

Infomercials: The epitome of an "investment trap," these "systems" that are advertised on late-night tv are generally at best worthless advice and at worst outright scams. Do not follow these infomercials and never ever buy the product they are promoting, surely it would turn out to be a bogus.

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