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Mistakes to avoid for budding investors

Mistakes to avoid for budding investors

  • 02 September 2022
  • By OCBC Singapore
  • 3 mins read

Investing can sometimes sound like a dream come true. What’s not to like about sitting back and watching your money grow? You start with a sum of money, and over time it turns into more money!

And no, it’s not a trick. Investing is indeed an essential step to growing your wealth and becoming financially sound. The earlier you learn how to do it, the better.

But before you dive right in, make sure you avoid these mistakes that newbie investors often make.

Putting all your eggs in one basket

Diversify, diversify, diversify. You’ve probably heard this before, and for good reason!

Investing always comes with an element of risk. The higher the risk you take on, the higher your potential returns will be. However, this also means that there is a bigger chance you might lose a substantial amount of what you’ve invested. Therefore, you should not take on more risks than you can handle.

To protect yourself from suffering losses, you should always diversify by investing in a wide range of investment products and also diversify within an asset class.

For instance, when investing in stocks, never put all your money into one single stock. Instead, you should be investing in a range of stocks across different industries.

One way to diversify your stock investments without needing a lot of cash is through a Blue Chip Investment Plan. This plan allows you to invest monthly into blue chip shares and Singapore-listed exchange-traded funds with as little as S$100. By making monthly investments, you can smooth out the effects of market fluctuations and spread out your risk.

Trying to make a quick buck

Investing is a marathon, not a sprint. Many newbie investors make the mistake of getting preoccupied with the possibility of short-term gains.

Take advantage of your youth and invest with the goal of earning gains over the long term. You have lots of time to let your investments accrue in value. You will be thankful in the future!

Plus, investing for the long term is actually less stressful than speculating and trying to time the market. On the flip side, investing small amounts in an exchange-traded fund, unit trust or a Blue Chip Investment Plan is very easy and can even be automated on a monthly basis. You won’t have to worry about the short-term market fluctuations because you'll be in it for the long haul!

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