Categories: General

Young Investors – Do’s and Don’ts

A thread in Quora asked for a list of worst financial mistakes that a person in 20’s can make. The brief answer lists 4 such mistakes. The source of the list is the classic article in JagoInvestor

Buying products only for “saving tax”
Waiting for the “right time” to invest
Getting high on debt, early in life
Over relying on relatives, friends and parents for your financial decisions

In this short article we would look at how these mistakes get made and possible ways to avoid them.

Errors	Why they happen	How to avoid
Tax Saving Bias	Focus on tax-savings without a proper plan	Choose investments aligned to your plan From that, choose tax-saving options
Market Timing	Focusing on short term volatility Indecisiveness	Develop a long horizon for investments Ignore short term volatility and build discipline in investing
Excessive Debt	Desire for immediate gratification Aggressive selling of loan products	Avoid loans for depreciating assets Build up savings to purchase gadgets, take trips, etc
Biased/Incorrect advice	Relying on ‘free’ advice Inability to detect bias in advice	Don’t take advice from sellers/agents Invest in professional advice