Avoid Common Investing Problems

There may be plenty of other areas that can derail your investments but the ones that I believe to be the biggest are: following stock tips, selling too soon, not finding help when needed, not doing research, and risking too much money on any given investment. There is no guarantee that if you prevent each of these areas that you will make money. But, you will certainly put yourself in a much better position to do so. If you avoid common investing problems you should be well on your way to market success.Here is a breakdown of each of the common investing problems listed above:Following Stock TipsThere are some people that like to believe they are the next Warren Buffet and will offer anybody willing to listen stock tips. They get a sense of authority by doing so and many people unwittingly follow this advice. Now, there are people who know how to pick stocks and you may even be aware of these people that have been successful with their portfolios. Most people though, are just blowing smoke and it’s best to avoid any recommendations from tipsters. Even people who are successful at picking stocks often have different objectives for their portfolios. For instance, they may tell you to buy so and so company but they don’t tell when to sell. Their objective may be short term while yours is long term. Stock tips do not typically work and therefore you should stay away from them.Selling Too SoonThere is no easy way to get around this one other than to have experience. I have been investing for over fifteen years now so I feel safe in companies that I have thoroughly researched and believe in. Experience is probably the only way to avoid this common investing problem.Not Finding Help When NeededAs I stated in the opening of this article, investing is not easy. If you find that you just don’t have the time to properly research stocks, then you should seek professional help. Caution is advised when choosing a professional but there are good ones out there. Ask a lot of questions and don’t settle for the first one you speak to.Not Doing ResearchI’ve touched on this several times in this article but it is the foundation to avoid common investing problems. This is a big one and this article couldn’t even come close to doing justice on such a vast subject. There are plenty of resources available at books stores and online. It is the single most important common investing problem to overcome. Learn about the proper ways to research a stock.Money ManagementToo many people try to score big on one stock and put way too large a percentage of their portfolios on that stock. A good rule of thumb used by many financial advisers is to spend no more than two percent of you portfolio on any one stock. This works great when the stock rises in your favor. But it is equally likely for the stock to go down (for a multitude of reasons). By limiting your exposure, adverse market conditions will not hurt your portfolio as much.By following the guidelines above you should be avle to avoid common investing problems and be well on your way to better investing principles. There is no substitute for experience but with this guide you should be able to redirect any common investing problems.