Mistakes to avoid while investing in real estate

Mistakes to avoid while investing in real estate

It is a truth universally acknowledged that a person in possession of a small fortune must be interested in real estate investing. Jane Austen may or may not have uttered these words but in this current day and age, it is very true. Buying a house is one of the most important milestones in a person’s life. With the boom in population and rise in prices, everyone wants to buy a property. It doesn’t matter whether you wish to rent it out or sell it at a later date. Investment in real estate offers great opportunities for high growth. However, there is a chance of committing a few mistakes when you set out in this field.

Here is a list of mistakes you should avoid when you start investing in real estate and some real estate investment tips.

1) Choosing the wrong location

Real estate is all about location, location, location. Sometimes, even being on the wrong side of the road can spell the difference between profits and losses. In the future, whether you wish to rent out the place or even sell it, remember that prospective buyers have a high regard for the right location. One such real estate investment options is to search for a property with the right location that fits within your budget and real estate goals.

2) Ignoring paperwork
Alright, paperwork sounds boring but the truth is: it is extremely important (especially in real estate). You want to ensure that all the documents are perfectly in place. There have been many instances in the past where real estate investors were cheated because they were duped with fake documents. Read the contracts thoroughly and make sure everything is in order before you buy the property. You could also use the services of a lawyer to ensure that there is nothing wrong with the paperwork.

3) Buying the first property you see
Many real estate investors are struck with the symptom of “loving the first property they see”. This can be due to the fact that the investor is a novice or he is simply lazy. A single investment in real estate can cost lakhs (or even crores) of rupees. You don’t want to make that investment decision without looking at other options. Always check out a few properties so that you have the choice to make the best financial decision in the end.

4) Waiting too long
Buying the first property is not good. But at the same time, waiting too long is not good either. When they start researching, a few investors get bogged down by the feeling that a better property or a better deal is around the corner. As a result, they wait and wait without making the investment decision. This can be harmful too. When you find a property that meets all your requirements, it is time to sign the dotted line.

5) Not saving enough for repair and maintenance
This is a common mistake committed by rookie investors. By the time they finish the deal, they exhaust all their financial resources. As a result, they don’t have enough money for maintenance or renovations. Buying a property is one thing but if you wish to put your mark and sell it in the market, you need to factor in additional expenses. Things like furnishing the property, roofing and refitting appliances can cost a big buck and you need to be prepared to finance these expenses.

Real estate offers great investment potential but it is not a get-rich-quick scheme. In order to see profits in the market, you could pay heed to the above-mentioned mistakes to avoid while investing in real estate. You may also want to put in hard work and identify the best properties that fit in your budget. Alternately, you could also seek the advice of a real estate investment advisor. Don’t let emotions drive your decision making or you may end up paying too much for a property. Remember, you always have the power to walk away from the negotiating table if the price is too much.

Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.


Mistakes to avoid while investing in mutual funds

There are bound to be a few mistakes in the initial phase of a new venture. It is no different with a mutual funds investment. But what if you had a cheat code to avoid these mistakes? This article is merely that -- it points out the mistakes you may make while making a mutual funds investment. Let’s look at some of the common goof-ups. 1) Waiting too long to invest: The best time to invest was 20 years ago. The next best time is now. However, many people avoid taking the first step because they think they don’t have sufficient funds to invest. This is a wrong approach. With mutual funds investment plans, you can start investing with very small sums of money. Even Rs 500 is enough to get started. The power of compounding ensures that even small amounts can grow into larger sums over time. The longer you wait, the more you miss out on the benefits that mutual funds investment basics offer. Start investing early to maximise your financial returns.  2) Panicking: Warren Buffett, the great investment guru, explains that you should buy low and sell high. However, a common mistake among investors is to panic when the market turns bearish. They dump their equity funds to minimize their losses. In other words, they start investing when the market is at a high and exit when the tide turns the other way. This strategy is the exact opposite of successful investing. It is common for the market to go through bullish and bearish cycles. But that doesn’t mean you react to these short term changes. When you invest for the long term, you should avoid panicking by continuing your regular investments month after month.  3) Investing without a plan: There are thousands of mutual funds in the market. And each fund is designed to help investors meet specific investment goals. If you invest randomly without a proper financial plan, you can make the mistake of picking the wrong funds in mutual funds and investment for a better future. For instance, equity funds are good for long term goals but for short term goals, it is better to invest in debt funds. By creating a detailed financial plan and investing accordingly, you can meet all your financial goals at the right time.  4) Not monitoring your funds: Investing is not an exact science. You can do a lot of analysis and pick out the best mutual funds that you hope will perform. But that may not always be the case. It is possible for funds to underperform from time to time. And you can know this only if you keep an eye on your funds. You should monitor your funds on a regular basis to ensure that they are performing up to your expectations. If not, it may be necessary to replace them with better alternatives. But that said don’t scrutinize the performance on a daily basis. The stock market can be volatile and you don’t want to worry about each up and downturn in the market. Have a proper time horizon and monitor accordingly.  5) Stopping your SIPs: Systematic Investment Plans (SIPs) offer the best returns when you invest consistently on a regular basis. However, many investors wrongly assume that by timing the market and only buying mutual fund units at low prices, they can get higher returns. When you stop your SIP, a smaller amount of money is being invested. It is best to continue your investments to achieve Rupee cost averaging over time. Conclusion It is a good idea to invest in mutual funds. But to maximise your returns, it is necessary to avoid some of the common pitfalls. Now that it is clear you know how to avoid while investing in mutual funds, you can successfully create a good corpus to meet your financial goals over time.Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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Mistakes to avoid while investing in stocks

In the medieval times, the early explorers had an extremely difficult time navigating the dangerous seas. The reason is that they were the first ones to do so. But once they identified sea routes and created maps, it became a lot easier for the people who followed. Every investor who starts out in the stock market is an explorer of sorts. He wants to find the best way to make money for himself and his family. But what if he was handed a map to make his life easier? He could avoid some of the common mistakes of his predecessors. In this article, let’s find out some of the common mistakes you should avoid when you invest money in the stock market.1) Assuming that investing is a gateway to quick moneyInvesting in the stock market is a great way to create wealth. However, it is not an easy quick-fix solution to short term money problems. Don’t speculate or try to time the market; especially if you are a novice investor. One wrong decision and you could end up losing a substantial sum of your hard earned money. You need to take your time and make a good investment decision before you put your money in a stock. Have a long term investment approach and invest carefully. 2) Following unsolicited tipsYour friend tells you that the latest summer movie is amazing. He recommends that you should watch it. Would you take his unsolicited tip and watch the movie? Sure. Why not; it is quite a harmless suggestion. But what if he told you that he knew an amazing stock that could triple your investment in one year! Should you heed his advice? Absolutely not! At least not until you have done your own research. A lot of investors pay heed to unsolicited investment tips and end up with poor returns. You should always check out if a stock is worth buying or not. Research is a very important step when it comes to investments in the stock market. 3) Depending too much on past performanceA stock has been giving amazing returns for the past four years. As a result, everyone you know wants to buy it. They expect a great performance this year too. What could go wrong?Well, it is possible that the stock fails due to some other external factors that have nothing to do with past performance.When it comes to stocks, past performance is a good way to analyse a stock’s history. However, it should not be your only indicator. You need to consider the future potential of the stock too. Fundamental analysis can be a great help to identify whether there is value in choosing a particular stock. 4) Not diversifying your portfolioAlright, you have done your analysis and you found that the Information Technology (IT) sector has a lot of potential. You decide to invest all your money in stocks of this sector alone hoping that your returns rise quickly. But in case of a market crash that affects this sector severely, you could end up losing all your money.Never put all your eggs in one basket. Diversification is the key to minimize your risks. Create an investment portfolio that includes stocks from different sectors. This way, you can limit your exposure to market volatility and avoid total loss in case there is extreme price movement in any single sector. 5) Ignoring risk vs. returnWhen it comes to stocks, the single most important formula you need to remember is: buy low, sell high. The second most important one is: higher the return, higher the risk. You may be interested in very high returns. But are you prepared to bear the high risk that comes with the investment? As an investor, it is extremely important to balance your personal equation of risk vs. return. Identify your risk appetite and invest accordingly. Ideally, you shouldn’t try to invest any more than you can afford to lose. To sum upThe stock market offers immense potential for an investor. There are many interesting ways to increase your wealth. The more you learn, the greater your experience. But that said, it is still possible to make mistakes once in a while. But by being aware of the above common mistakes, you can avoid them in your investment journey. Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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