MANILA, PHILIPPINES — No matter what the season, investments are always a good idea. One will want to grow the money they have by making it work for them, and one of the most common ways to do that is by investing in stocks.
But before one should start pouring your money into different stocks in the market, it’s best to make sure one knows 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.
One must try to avoid certain tendencies and temptations when investing. It’s easy to lose control and even easier to lose a lot of one’s finances when one overextends oneself 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 one’s chances of success when investing, especially if one is quite new to the stock market.
Mistake Number 1: Letting emotions cloud one’s judgment
It’s really easy to panic or get greedy whenever one looks at the market at any given time. It could result in quickly selling losing stocks or holding on to winning stocks longer than someone should. Doing so might minimize profits. It’s best to be rational and to have a steady 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: Lacking to understand what a company does
While one can technically invest in any company listed on the market, it’s also one’s 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 one’s hard-earned money. De Guzman suggests that one 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 one can begin investing in it.
Mistake Number 3: Not diversifying one’s portfolio
The best portfolio is a diversified portfolio. As long that they 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 one can spend monitoring and managing one’s own portfolio, as a general rule, try not to invest more than 5% to 10% of one’s money to any one investment. “Don’t put all your eggs in one basket,” says de Guzman. “Collect, then select.”
Mistake Number 4: Over-diversifying one’s portfolio
Although diversification could be good for a portfolio, overdoing it may hurt your long-term returns. The trick is knowing enough about the market so that one 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: Lack of patience
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 investments take a lot of time, and anyone who promises one 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, one doesn’t have to make their investment decisions alone. To know more and get started on investing with EastWest, visit the nearest EastWest store or visit the EastWest website today.
