7 Biggest Mistakes Investors Make
Four: Owning too many
Ever notice how some individual investors have dozens of individual
stocks in their portfolios? I’m not talking owning mutual funds, which is
something altogether different, and not the topic of this report.
Instead, I’m talking about individual stocks. Just don’t own too many –
seven is probably about the highest number any person should own at one
time. And that’s only if you have at least $1 million to invest, and can spend
some quality time with your stocks every day.
If that sounds like you, cool! In a minute, we’ll take a quick look at some
portfolio management techniques.
But say you’re starting out with about $3,000 to invest. (And by the way, it’s
best to ignore all those so-called investing “gurus” who mean well, and tell
you it’s possible to start investing with only a few hundred dollars. It sounds
like a good, encouraging thing to tell newbies, and people who tell you that
often mean to be helpful, but the truth is: With a small portfolio, the
commission costs will eat away at your capital very fast. Even if you’re
using a low-cost online brokerage, you have to be prepared to occasionally
move in out of stocks fairly quickly. Don’t worry, we’re not talking about
day trading!! But as we’ll see below, you sometimes have to move pretty fast
to preserve your gains or cut your losses – so that’s one reason why it’s not
really a smart idea to start with “only a few hundred dollars,” as so many
well-meaning but clueless investment writers suggest.)
Seven Biggest Mistakes Investors Make