Most Common Mistakes Made by the Beginners in Stock Markets.

There are a number of beginner investors who enter the stock market world to make huge fortunes, but instead suffer heavy losses due to some common mistakes made by them.

In this post, I am going to suggest 6 most common mistakes made by the beginners in stock market. Therefore, stay with me for the next 5-6 minutes so that you can avoid loss once you enter the stock market world.

Most Common Mistakes Made by the Beginners in Stock Markets.

1. Investing on TIPS or suggestions:
   This is the most common mistake by the beginners. They blindly invest based on the ‘tips’ from their brokers or recommendations from the financial websites, without researching the company properly. Remember, no one cares about your money more than you do. It’s you who has to decide how to invest intelligently to avoid losses and get maximum profits. If you do not have time to study the company, then go for mutual funds. They have very highly qualified fund managers for mutal funds
   
2. Zero Diversification: Taking a single big bet for beginners can be very risky. If you do not know how to bat, never try to hit a six on first ball.
   
   
3. Over-diversification: If you buy 10 stocks in a investment of Rs 5k, it will kill your profit by averaging out. It’s better to invest on 3–4 stocks (whom you are damn confident about) if you have 5k to invest.
   
4. Investing in penny stocks: The penny stocks give the highest returns. However, it also has the most failure rate. In the beginning, go for mid and large cap stocks to first learn and to avoid heavy losses. Once you have gained enough knowledge and experience, you can surely invest in penny stocks.
   
5. Impatience: The beginners investors always want to make money fast. Some even try to double their investment in a month. Investing is not gambling. People are ready to get 4% interest on saving account, but not happy with 15% return in their stock market portfolio. They want a fast big return. However, if you want to make big money, you have to give your investment time to grow.
   
6. Holding the losing stocks: When your stock fells to -60%, and the company is consistently giving bad performance, do not hold the stock expecting it to be a turn-around. Take out the money and invest in a better company. Even the greatest investors like Warren Buffet, has few of his stocks in loss. There should be no pride/ego problem (which is common in beginners) that you made a bad investment.

That’s all. I hope this post is useful to the readers.

Further, do comment below what you think is the most common reason for stock market beginners to lose money.