More than 70 percent of retail investors have to face losses in the Indian stock market. Despite this, there are only 12 percent investors in India who take the help of financial advisors for investment. Many times even experienced investors have to face losses because they fail to understand these three issues before investing. Come on, let’s understand this.
Which 3 issues are important to understand
The 2018 ET Wealth Survey report revealed that more than 70 percent of retail investors in the stock market exit the market after losing money. This is because he does not pay attention to some issues before investing. As-
Investors are not able to do correct asset allocation. That means how much money you have to invest in which type of investment.
Taking risks even if one does not want to.
Not paying attention to all aspects related to shares before investing.
What to look for while investing
According to The Financial Analyst Journal, 91.5% of the profit you get from an investment depends on asset allocation and less than 7% on stock selection. That means, if we get 20% profit from an investment, then 18.3% of it is decided by asset allocation and 1.7% is decided by market timing and its selection. However, most investors invest money either in trending stocks or stocks suggested by some of their acquaintances. In such a situation, there is a risk of risk along with profit. Proper asset allocation creates a balance between high growth assets and low exposure to risk. For investment, it is important that you know the right time to enter and exit the market.
Most people make this mistake
According to a study by Smart Asset Financial Asset Survey, 52% of financial advisors believe that the biggest mistake people usually make in investing is when they keep waiting for the right time. In fact, instead of predicting changes in the market, long term investing often proves beneficial. Suppose if you invested in Nifty 50 for seven years in the year 1999, then the probability of loss remains 0% and the probability of earning more than 10% annually remains 82%.
According to SEBI, people invest in mutual funds only for a maximum of five years, whereas, 71% of investors withdraw all their money within two years. It is clear from this that very few investors invest in the long term. Whereas, most of the investors exit the market at the wrong time without proper understanding.
Also read: This IPO is going to shower money on investors, there can be a profit of 48% on the day of listing itself.
