Whether you are a first-time investor or an investment guru, mistakes happen. The key to avoiding mishaps is to keep on top of investment rules, tax codes and annual reports:-
- Study. Read latest financial news, personal-finance Indian magazines, stock market eBooks, corporate and quarterly reports and the prospectuses for the financial products you are considering.
- Develop goals and strategies to meet your goals to choose stocks and other investments. Ask for professional advice if you are uncomfortable investing on your own.
- Diversify. Avoid putting large portions of your portfolio in single stock or industry so that you are not so affected by its ups and downs.
- Take advantage of tax benefits.
- Buy stocks that you plan to keep for three to five years. Remember that "good" stocks at unrealistically high prices are a bad buy. Aim to buy at a low price, sell at a high price.
- Invest in what you know and avoid buying stocks in unfamiliar industries and companies.
- Shop for total value. That means learning to calculate key financial figures, such as price-earning ratios, so you can compare stocks.
- If everyone is buying gold, variable annuities or some other investment, watch out.
- Know when to fold. Your objective may be to hold a particular stock or mutual fund for three to five years, but if its track record looks like terminal descent, bail out.