Avoid Using the Trial-and-Error Method while Investing and hire a Financial Advisor to gain maximum ROI.
Do-it-yourself (DIY) investing is a new fad these days. People want to do it all on their own. It has become a trend that everybody does everything on their own from baking to investing.
However, it is not as simple as it sounds because it requires a lot of time for research and adequate knowledge. DIY investing may help an investor save money in the form of subscription fees or charges which they would have to pay on availing professional expertise. Despite that, there are some significant disadvantages which can be dangerous to one’s financial health.
When everything goes well, most DIY investors tend to attribute their success to their investing knowledge rather than the overall performance of the broader market. This gives them a false sense of confidence. However, there can be many perils associated with DIY investing such as:
Lack of Proper Diversification
An ideal investment portfolio should include a variety of good quality stocks from diverse sectors, bonds, some debt and other investment instruments. When a DIY investor makes some profit from stock markets, he tends to ignore other financial investments and puts all his investments in one basket. In such a situation if the stock market in India crashes the investor may suffer a devastating loss.
Even when it comes to equities, the ideal size of a portfolio should be around 20–25 stocks spread across different sectors. However, while choosing those stocks an investor has to exercise extreme caution and conduct detailed research to pick the right opportunities. Diversification in investment is very important for appropriate gains.
Appropriate Exit Plan
Most DIY investors in the stock market are not sure about the exact time when they should exit a stock. If they buy a stock and it falls around 15%, they still prefer to hold it in the hope that it will recover. But, in many cases, the price falls even further. It is very important to exit a stock which is in a continuous downtrend and its value is unlikely to increase anytime in the near future.
On the other hand, when a stock price is going up continuously it is important to stay invested by staying away from the urge to sell to make a small profit and thereby compromising on a larger gain.
Temptation to invest in penny stocks or low-priced stocks
DIY investors often make the mistake of assuming that falling prices always present a buying opportunity. However, it would be best to stay away from companies that have a failing business model. Although it might be tempting to invest with the hope of increased gains, it is best to avoid such shares or stocks.
Frequent Portfolio Review
Investors need to keep regular track of the company that they are invested in. If a company is not doing well you should exit the stock. However, if you still continue to hold stocks of such a company then you may lose your money.
Managing your stock market investment portfolio can be a complex and time-consuming process. A DIY investor may miss out on small but important things which a professional financial advisory service would not. What such investors don’t realize is that the advice that they receive from an expert can pay for itself many times over in the form of exceptional returns. Thus, expert advice can ensure peace of mind.
For a nominal cost, Research & Ranking, India’s leading equity advisory offers complete handholding to investors right from the time an investor starts his investing journey till fulfilment of his financial goals.
Research And Ranking: Services and Offerings
Founded in the year 2016, Research & Ranking is dedicated to making equity investing a hassle-free, rewarding and easy process for the investors. With an in-house research team having a combined experience of several decades and overall employee strength of 150+ professionals across 4 locations in India, the company has helped 14000+ investors to achieve their financial goals.
Research & Ranking’s flagship product, the 5 in 5 Wealth Creation Strategy, helps investors to multiply their wealth by 4 to 5 times in 5–6 years by investing in a well-diversified portfolio of 20–25 multibagger stocks. The company’s second offering, the Mispriced Opportunities Strategy, helps investors to gain from the volatility in the stock market by investing in stocks trading below their intrinsic value, thus having the potential to generate 25–50% returns in 6–12 months.
The company also offers two premium advisory services specially designed for HNI and Ultra-HNI clients named Dhanwaan and EWA Exclusive. The objective of these services is to create huge wealth by investing in high growth businesses that shall grow at a rapid rate with India’s growth trajectory, thereby compounding investor wealth at CAGR of 25–35%. The company’s investment recommendations are backed by detailed research reports and they also offer timely rebalancing strategies as and when required.
For more information, visit researchandranking.com.