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By Vicky Mehta
Ever noticed how most investment advice is centred around telling investors what they must do. But the opposite i.e. what
investors must refrain from doing is as relevant. In this article, we list five common investment mistakes that investors must
avoid.
Investors must try to understand the reason behind the impressive showing. This in turn will help them evaluate if the
performance is sustainable. Consider a situation wherein a funds performance can be attributed to simply riding rising markets
by investing in stocks that are the season's flavour. In such a case, the impressive performance is unlikely to be sustainable
over the long haul and hence is misleading for investors. Therefore, making investments based solely on the performance is
fraught with risks.
Investing without goals and plans amounts to investing in an ad hoc manner. As a result, investments may become
directionless and fail to achieve desired results. Investors must appreciate that investments are not an end, rather they are
means to achieve an end. Hence, the importance of having goals and plans in place at the outset.
A portfolio review is also necessitated by a change in the investors risk profile and needs. With passage of time, a new set of
needs may emerge; also the investors risk-taking ability might change. The portfolio should be suitably modified to incorporate
these changes. Ideally, the investment advisor must play a significant part and aid the investor in the review process.
(acknowledgement: http://www.morningstar.in/posts/1094/5-common-investment-mistakes-to-avoid.aspx)
HDFC securities Limited, I Think Techno Campus, Building B, Alpha, Office Floor 8, Near Kanjurmarg Station, Opposite Crompton Greaves,
Kanjurmarg (East), Mumbai 400042, Fax: (022) 30753435
Disclaimer: This document has been prepared by HDFC Securities Limited and is meant for sole use by the recipient and not for circulation.
This document is not to be reported or copied or made available to others. It should not be considered to be taken as an offer to sell or a
solicitation to buy any security. The information contained herein is from sources believed reliable. We do not represent that it is accurate or
complete and it should not be relied upon as such. We may have from time to time positions or options on, and buy and sell securities referred to
herein. We may from time to time solicit from, or perform investment banking, or other services for, any company mentioned in this document. .
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