The act of investing your money is a great way to increase your wealth. Especially when you make the right choices. But getting started isn’t easy and even novices can make costly mistakes. Here are some helpful tips to avoid making costly mistakes in the market.

1. Learn the basics of investing.

The stock market is the place where securities are traded, including stocks, government or corporate bonds, and exchange-traded fund. It’s essentially an auction in which a publicly traded company sells shares to investors in exchange for capital. Investors purchase and sell shares when they believe the value of the company can be increased or decreased. The value of a stock is determined by a variety of factors, including the state of the economy, environmental disasters conflict or peace and many more.

2. Set long-term goals for investment.

Most financial experts suggest that you stay invested in the stock market for the long-term at least five years or more. This allows you to build your investment portfolio and allows you to weather the inevitable losses from markets that are volatile. Many new investors are swayed either by the quick-term gains or lose patience during inevitable market declines and decide to sell their stocks too soon.

3. Diversify your portfolio.

Diversifying your portfolio will reduce the risk. Diversifying your portfolio into different industries, asset classes and geographic regions is important. It’s also important to stay clear of placing too much money into one company. This is known as « concentration risk », and it can be fatal when the company is facing issues such as regulatory issues or public relations crises.

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