3 of the biggest mistakes first-time investors make

In conversation with nestegg, Robert Francis, the Australian managing director of investment platform eToro, flagged three of the biggest mistakes that new investors make – and how to avoid them:

1. Going in completely blind

“Jumping into the stock market without having any prior knowledge is not wise,” he warned.

He explained how inexperienced investors taking high risks are most likely to lose capital.

“Watch, learn and practice before investing any money.”

He recommended doing your research, gathering an understanding of how the stock market operates and learning key terms before jumping in.

2. Not doing your homework

According to the director, the need for research extends through to individual companies.

“Some investors don’t spend enough time doing their research on some of the businesses they invest in.”

By researching particular sectors and trends, you’ll gain insight into what companies are generating value, and those you should steer clear of, Mr Francis offered.

And for those investors who can’t commit to ongoing research, “then copying someone else who does may be the better route for you”.

3. Investing more than you can afford

Mr Francis reminded potential investors that the stock market is not a get-rich-quick scheme.

“Investors should adopt a long-term investment mindset and only invest what they can afford to lose if markets don’t perform as you had anticipated.”

High-risk mindsets held by inexperienced investors can result in losses, the director reminded.

This is especially so in the global pandemic, with markets having been extremely volatile.