[ad_1]
Whether you're new to investing, you've probably already been warned of some mistakes. Buy low and sell high, meet your banker before investing, diversify, do your own research.
It is imperative to pay attention to all these warnings, but there are other common mistakes that almost all investors are victims of.
Error 1: niche markets
Let's face it: many of us tend to invest because there is an exciting new industry that we can only enjoy. Take the cannabis industry today. The shares of cannabis companies soared last year as investors attempted to get on the marijuana train before it left the station.
Well, this train has certainly left the station recently, as many large companies have seen their share prices halved as investors now mistrust the recession. Frankly, they are also impatient, as many marijuana companies are not profitable as soon as investors have hoped.
Now, I'm not saying you should not buy anything in a niche market. Aurora Cannabis Inc. (TSX: ACB) (NYSE: ACB) is a great way to use cannabis right now.
The stock is selling at a low price, but it is believed to be the largest cannabis producer in the world with a potential of 700,000 kilograms by the end of next year. It is already established in 25 countries, including Canada, and is about to reach a selling price per gram of $ 1 by the end of production.
So, although you can buy niche markets, one mistake would be to buy a lot of companies in this sector and expect them to increase all of them. Instead, do your research and focus on a few.
Error 2: No plan
You need a goal. This is the number one investment priority. Without a goal, your investments will be ubiquitous and will have nothing to do in the long run.
Apart from the obvious purpose of making money, why are you investing? Pay off debts? To buy a car? To retire? Think about this and then talk to your banker to find out which number you want to reach and in how long.
If you have the time, opting for stable, low risk stocks would be a great way to put your money. An exchange-traded fund such as BMO Canadian Equity Low Volatility ETF (TSX: ZLB) is a great option because the company is managed by analysts looking for securities with little or no risk.
This means that even if you will not see a jump as big as the one with, for example, Aurora, you will see a steady upward trajectory for your money if you invest in the next few decades.
Mistake 3: Look at the markets as well closely
This is the nature of the beast. Markets go up and down. Every day, something can happen that sends the shares back and forth, causing investors to panic. Take Shopify Inc. (TSX: SHOP) (NYSE: SHOP) for example. Both sides of the action could be said to say that investors let panic prevail.
When equities climbed, investors panicked to miss their chance. Now, stocks are falling as investors worry about the future of the tech sector, again driving their panic and selloff.
But again, you have to search for your businesses and decide whether or not it is long-term purchases. Of course, you want to buy low and sell high, but if you wait a long time, you are almost sure to sell high, anyway.
It's better to wait for a storm like a recession and sell high in a few decades. Shopify is designed to be one of those securities that can still generate significant returns for the long-term investor.
Its recurring revenue, distribution centers and large customer base are just a few areas in which the company has proven itself. So stop watching his course of action so close Everything will go out in the wash.
Amy Legate-Wolfe, a silly contributor, owns shares in Aurora Cannabis and Shopify. Tom Gardner owns shares of Shopify. The Motley Fool has shares of Shopify and Shopify. Shopify is a recommendation of Equity Advisor Canada.
[ad_2]
Source link