People walk past a sign showing the exchange rate for the U.S. dollar. (Photo : Getty Images/Chris McGrath)
With the advent of movies like Martin Scorsese's "Wolf of Wall Street" and various other investment-themed pieces of media, it comes as no surprise that a lot of people are trying to make it big quickly by way of investing their hard-earned money. However, while doing this right will net a significant amount, there are still various pitfalls to avoid.
One of the most common, if not the most common mistake, people make especially when just beginning to invest is diversifying investment portfolios to the point wherein "toes are dipped" into the waters of every sector. What is worse is that this mistake can catch even the most experienced of investors off-guard with some people losing massive chunks of their portfolio because of this mishap.
What people need to remember is that there is no need make investments in every sector to try and "beat the market." Stick to the known sectors, as these have already proven to be able to make money. It would not hurt to listen to the people with a lot more experience in the field of investments as well.
In order to avoid this mistake, it is advisable for investors to try their hand at a model portfolio first before diving putting real capital into companies. This is especially true when investing real money in new sectors. Services such as Marketocracy can work wonders in this regard.
It is also advisable to avoid investing in the stocks that performed well in 2015 as high-performing stocks one year may completely plummet in the next, according to US News. It would also help to track quarterly reports of particular sectors, as doing so will show a larger picture of a certain corporation's growth.
If this mistake has already been made, there is still a chance to fix it. The best course of action if this is the case is to immediately close the floodgates, according to Forbes. There is no need to hold on to shares and wait for the losing sectors to make money and there is definitely no need for any guilt over the sales of those shares.
Watch a video about investing for beginners below:
