Mumbai (Maharashtra) [India], December 09: The promise of easy money and financial independence has tempted countless investors into DIY investing. However, experts like Neil, Nithin, Shivani, and many others believe this path is filled with hidden costs and unexpected challenges.
From the infamous Harshad Mehta scandal to the recent surge in fin-fluencer scams, running after quick riches can lead to financial losses. Economic downturns worsen these risks, as fear and desperation may lead to bad decisions.
“Just last month, IREDA was all the rage, its stock price skyrocketing. Like many, a friend of mine got caught in the hype and invested. Now, just weeks later, the stock is down more than 25%. This isn’t an isolated incident”, said Dr. Gaurav Garg. Online forums like Reddit are full of individuals facing similar losses, often after taking investment advice from inexperienced sources.
Four common investment mistakes
The allure of quick riches is tempting, but even seasoned DIY investors can make common mistakes derailing their financial goals.
1. Chasing hot tips and unqualified advice
A recent case highlights the dangers of relying on self-proclaimed, unqualified experts. Abid Ali, a former cloth merchant, turned to YouTube and Google to learn about stock trading. He quickly gained popularity and even became an authorized person for a brokerage firm. However, his lack of formal qualifications led to SEBI’s regulatory action.
On the other hand, Shivani Bazaz, a journalist, argues that while fin-fluencers may provide DIY insights, SEBI-registered remain the most reliable source of financial advice. Sustainable wealth creation requires a disciplined approach and in-depth knowledge. A qualified investment advisor can provide market expertise, risk management strategies, and guidance on spreading investments across various asset classes to mitigate risk.
2. Ignoring diversification
Putting all your investible surplus in one asset is a recipe for financial disaster. Diversification helps investors minimize risk by spreading their investments across different sectors. For example, even the most popular Ratan Tata group has expanded into other business streams like power, steel, autos, IT, hospitality, and more.
3. Overtrading
Frequent buying and selling, fueled by emotions or short-term thinking, can reduce returns due to transaction fees and impulsive decisions.
4. Neglecting long-term goals
Getting caught up in the pursuit of quick gains can distract you from long-term financial planning. A well-defined financial plan considers your goals, risk tolerance, and investment horizon.
Chandra Bhatia, an investor, accumulated a stock over three years, patiently investing 15% of his capital. Despite a significant dip during the pandemic, he held firm, driven by a long-term perspective. This belief and a well-timed investment resulted in substantial gains over a decade. Short-term fluctuations and market volatility can quickly derail financial plans if not managed with a long-term mindset.
Why do you need an investment advisory service?
Partnering with a like Equentis—Research & Ranking is crucial for mitigating investment risks and avoiding common mistakes.
Here are six reasons why you should choose an investment advisory service.
Reason 1 – Credibility and trust
SEBI has high standards for registered advisors, ensuring ethical practices and transparency. If you’re considering investing in a new stock, a SEBI-registered advisor can provide unbiased advice that aligns with your financial goals.
Reason 2 – Long-term focus
While achieving short-term gains all the time is impossible, sustainable long-term wealth building requires a disciplined approach and a deep understanding of financial markets. SEBI-registered professionals take a long-term approach, aligning their strategies with sound investment principles.
For example, investment advisors like Equentis will help you build a diversified portfolio that can weather market fluctuations over the years with their solid fundamental analysis and AI tools instead of recommending quick-fix solutions.
Reason 3 – Research-driven recommendations
Every recommendation you receive is backed by in-depth research and analysis. For example, before suggesting a particular stock, your investment advisor will assess its financial health, industry trends, and future potential.
Reason 4 – Personalized plans
Every investment journey is unique. SEBI-registered advisors create customized plans catering to investors’ needs and aspirations. Whether saving for retirement, buying a house, or funding a child’s education, your investment advisor will tailor a plan to fit your goals and risk appetite.
Reason 5 – Comprehensive analysis
Get a complete picture of your portfolio. Investment advisors can analyze existing investments and provide timely buy, sell, and rebalancing recommendations. For instance, if your portfolio is heavily weighted towards one particular sector, your advisor might suggest rebalancing to reduce risk.
Invest smarter with a SEBI-registered advisor
Many would be tempted to take advantage of a short-term rally and invest in the latest hot stock. However, with expert guidance, you could avoid losing your hard-earned money. Partnering with a SEBI-registered investment advisor can give you access to quality knowledge and experience, helping you build a diversified portfolio, mitigate risks, and work on your long-term financial goals.
Mr. Manish Goel, Founder and MD of Equentis -Research and Ranking, echoes this sentiment, “Our vision is to build a financial institution that establishes equities as the preferred asset class for every Indian investor. We want to help investors, irrespective of age, achieve their financial dreams faster through end-to-end solutions and wise investing strategies.”
With a trusted SEBI-registered investment advisor like Equentis, avoid common DIY investment mistakes and take an informed and strategic approach to building wealth. So, invest smarter, not harder.
