1. Do Not Invest In A Sector That Is Not In Your Interest
It is difficult for you to gain knowledge and achieve success in areas you are not interested in. The first warning of an investor like Warren Buffett who is among the most successful in the world: "Don't invest in an industry you don't understand". We have to understand this warning as follows: Do not buy stocks of companies that you do not know what business they do! The best way to avoid this mistake is to turn to mutual funds. In this context, you can create a diversified exchange traded fund portfolio. If you want to invest in individual stocks, make sure you get to know the company to which those shares belong, and then make your investment.
2. Don't Get Stuck In A Company
When you hold the shares of a company for a long time, and especially if this company has done a good job for a period, you may feel like you are connected to that company. You are more than just buying your shares, you're officially in love. Keep in mind that you are in the stock market to make money and purchased the shares of this company for this purpose. Don't be afraid to sell if your reasons for buying these shares change.
3. Don't Show Impatience
The end of patience is peace. Patience is bitter, its fruit is sweet. The patient dervish has achieved his desire… We have so many proverbs that praise patience, right? Behaving slowly but steadily is always the key that opens the door to success, whether in sports to keep fit, or in your career for a high grade in your lessons or in your career to get a good position. So why do you expect it to be different when investing? A slow, steady, and disciplined approach always outweighs the futile efforts made at the last minute by saying “the stone of the blind, whatever it takes”. Expecting someone else from your portfolio than what it was designed to make is an invitation to disaster. Therefore, keep your expectations realistic about the rate at which each stock you own will grow and the duration of this growth. Always keep your feet on the ground and be patient.
4. Avoid Daily Trading
Going back and forth between the buy and sell position is a total return killer, so to speak. If you are not an institutional investor who benefits from low commission rates for your transactions, transaction costs will literally hurt you. Not being able to benefit from the unique returns of long-term transactions is written to your household as the opportunity cost.
5. Don't Try To Predict Market Price Movements
Just like trading daily, buying and selling stocks in order to predict price movements is another earnings enemy mistake. Because it is difficult even for experts to successfully predict how the market will be priced. Even institutional investors who earn their living by trading on the stock market know the difficulty of this job and do not base their strategies on price prediction. In a scientific study named "Determinants of Portfolio Performance" (Journal of Financial Analysts, 1986), conducted by Gary P. Brinson, L. Randolph Hood and Gilbert Beerbower, it was examined how effective the price movements are predicting on the stock market. According to this study, 94% of your return on stock market investments is affected by your asset allocation strategy. Asset allocation refers to the mix of stocks, bonds and other asset classes in your portfolio and how much of your total capital is invested. Having the right balance (correct asset allocation) in line with the risk you are ready to take affects your earnings by 94%. As you can see, trying to predict how the market will be priced and trading has a 6% impact along with other factors even if you are successful.
6. Do Not Expect Shares To Become The Same Value Again For Sale
Waiting to rise and come to the same value to sell your depreciated stock is another mistake that evaporates your potential return. When this commercial behavior is studied with behavioral science, it is called "cognitive error". Not realizing the loss, investors actually lose in two ways. First, they refrain from selling a falling stock and remain indifferent to the continued depreciation of the stock. Second, by not applying the option to sell the stock and buy a stock upward, they miss out on a potential return. For this reason, you should turn to other stocks that you think will make a profit by selling a share that causes loss at the rates you have previously determined.
7. Do not be a prisoner of your emotions
The number one obstacle to your earnings in the stock market is your emotions. One of the main propositions in the stock market is that fear and greed govern the stock market. Don't let your greed or fear prevail over you. Always try to see the big picture by looking a little higher in cold blood. When looking at a narrow time period, up and down fluctuations can be seen in the stock market, but in a longer period, it can be seen that the shares of large companies generally appreciate at an average level of 10%. Stay calm and keep in mind that in the long run your portfolio will generate a return on this average. Even the emotionality of other investors can even reflect on you as a gain, thanks to your coolness.
Have an Investment Action Plan
For example, to create a pension fund by investing an average of 200 $ per month in 20 years, or to fund your child's university education by investing for 10 years, or to earn money to buy a top class car in 5 years.
In summary, set an investment objective, duration and a return target you want to achieve at the end of this period. You can also call this your investment life cycle.
After determining your investment life cycle, over time, review where you are in this cycle and whether you are on the right track in reaching your investment goals and make your decisions accordingly.
If you don't think you are capable of doing this, seek help from a financial advisor. Never forget your investment purpose.
This goal will encourage you to save more and help you allocate assets correctly while creating your portfolio.
Keep your return expectations realistic. For this purpose, make use of past period yield data. Don't expect to get rich overnight, so as not to be dreamed of silence. Remember that you can only get wealth with a consistent and long-term investment strategy.