The U.S. stock market is hitting an all-time high in 2021. As funds from all kinds of sources are flooding into the market, novice investors need to concern about risks and avoid some common money-losing mistakes.
1. Concentrated in One Stock
When you buy and hold one stock to make money, you are also paying the opportunity cost of missing out on the gains of other alternative investments. If you do invest in individual stocks, make sure you thoroughly understand each company those stocks represent before you invest. Before you make a purchase decision, ask enough questions to yourself and conduct the necessary research. What is the goal of this investment? How long should I hold this stock? Is the company’s industry booming or declining? What is the market share of the company in the industry, and how is it changing over time?
As a general rule of thumb, do not allocate a majority of your funds to any one investment. The easiest way to avoid this is to build a diversified portfolio of exchange-traded funds (ETFs) or mutual funds.
If you don’t have enough time to learn how to invest for yourself, get a financial advisor to help them out. The advisor will answer their questions and handle the investments. Many banks provide the option to use their financial…
