Investment Mistakes That One Must Avoid When The Market Highs 

Investment Mistakes That One Must Avoid When The Market Highs 
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There are two categories of stock market investors – those who have already invested in the market and those sitting on the fence about investing. 

Existing investors are wary and considering taking profits, while those who have yet to invest are unsure when to do so. Should you take a profit or sit on the sidelines? Let’s look at what to do when the stock market reaches new highs.

There’s a reason why personal finance is called.Understand that personal finance is more about you than it is about money. As a result, plan everything around what works best for you. You can’t hire others to perform your push-ups for you, and you can’t invest in financial instruments based solely on how well they worked for your pals. To establish a successful portfolio, you must concentrate on your objectives, risk profile, and asset allocation.

Don’t overlook the importance of luck

Whether you like it or not, chance has a role in your life. Avoid getting overconfident in your stock selection, believing that you can repeat it repeatedly.

Buying the dip isn’t always profitable

A market correction is an optimum time to enter, and buying the dip is a good deal if you assume the price will rise. It would be best to take advantage of any market correction to add to your portfolio by buying stocks and mutual fund units. However, when buying the dips, keep in mind that stock prices might fall for various reasons other than a healthy correction—for example, the stocks of YES Bank or Vodafone IDEA. Rather than investing a flat sum, you should spread your investments out over 6-8 months. 

Also Read: Impact Of Inflation On Your Investments And How To Tackle The Threat 

The phrase “buy low, sell high” is fiction!

The concept that you can time the market, take profits now, and invest when it corrects is nothing more than a fantasy. Many investors still make the mistake of trying to time the market. When the Sensex hit 47000, many investors took profits, thinking they’d get back into the market when it crashed. The Sensex is presently over 58000 points. As a result, the amount of time you spend in the market is more important than the timing.

Sell stocks that aren’t performing well

A market high can let you sell your bad stocks and mutual fund schemes, which is the finest thing a market high can do for your portfolio. Losses from bookings are just as significant as profits from bookings.

It will be more rewarding to dump a bad stock with a limited prospect of recovery than to stick with it. During the overall stock market high, many dud stocks surged, making it an ideal moment to clean up your portfolio. Remember, you’re in this to make money, so don’t get married to your stock.

Keep your SIPs going

The compounding process should never be interrupted. The whole point of SIPs is to invest at regular intervals to take advantage of rupee cost averaging and reduce market volatility. Market fluctuations should not be used as an excuse to terminate SIPs.

Reorganize your investment portfolio

Sitting tight or committing to a long-term investment should not be mistaken for inaction. Instead, you should re-allocate your portfolio based on your risk profile. If your risk appetite permits you to invest 60% in shares and 40% in debt, you should rebalance your portfolio if it has altered since the market peak.

If you’ve met your target, sell your investment

Have you met your financial objective sooner than you anticipated? Assume you set a goal of earning Rs 50 lakh by 2021, which you achieved. It’s now a fantastic time to make a profit or cash out your assets.

Also Read: Real Estate Investment Trusts (REITs): What You Need To Know


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