To lead a financially secure life, you must develop the habit of saving and indulge in mindful spending of your earnings. People who do not plan their investments well, often find themselves struggling financially. According to financial experts, the behaviour and mindset of the investor have a significant impact on not only a particular investment but also the overall financial health of the investor. Let us look at some bad investing habits that you can avoid for sound financial health.
- Hurried investments: The power of compounding helps generate higher returns on your investment, however, it takes time to show its true effect. Investors who have a long-term perspective typically are more successful than short-term investors. You can invest in different types of bonds to meet long-term investment goals as bonds usually have a long maturity period.
- Forgetting the fundamentals: The markets never move at an ideal pace, they may run fast in euphoric times and stay undervalued during the bad times. Often stocks show high volatility and intense price fluctuations in the short term. Investors often ignore the fundamentals like the company’s financial and operational efficiency and its valuation to make quick profits. This usually leads to extended periods of negative returns in the long run as stocks tend to align themselves with the business fundamentals over time. You can invest in stocks and bonds of fundamentally strong companies to avoid this mistake.
- Spending more than your earnings: When you develop a regular habit of spending more than your pocket allows, it is bound to hurt your financial health. Swiping your credit card for everything and taking unnecessary things on EMIs can lead to a disbalance in your earning/spending ratio at the end of every month. You should start monitoring your spending habits and prepare budgets in which you can add a portion for regular investments in some of the best bonds in India.
- Postponing financial decisions: Postponing good financial decisions like investing can be as harmful as making bad financial decisions. The earlier you start investing, the more returns you generate. You can invest in bonds online as a safe medium of investing to begin your investment journey.
- Taking unreasonable risk: Higher risk means higher returns is a general investment perception. It may be true in some cases but you need not take a blind risk on your money, especially if you lack the required knowledge and financial backing. Instead, you can buy bonds online or invest in government schemes or fixed deposits if taking risks is not your thing.
- Emotional attachment to investments: Some investments may have given you exemplary returns over the years and you may have got emotionally attached to them, making it tough for you to sell them off. This is not advisable as you may end up making a huge loss on a stock that has a history of good returns but is not profitable anymore.
- Failing to diversify: A particular investment class may have given you good returns, making it your favourite investment avenue. However, you should not put all your eggs in the same basket and have a diversified investment portfolio to have a holistic investment portfolio. You can visit trusted bond investment platforms like BondsIndia to add bonds to your equity investment for diversification.
Now that you have understood the common investing mistakes people make, you can make more informed investment decisions. If you are wondering how to invest in bonds, click here to know everything about bonds.