How to Fail as an Individual Investor

Success in investing, like all aspects of life, is dominated by blessing of success from God Almighty, followed by working with the right reasons. Among the most prominent things that the individual may overlook and often lead to investment stumbling are:

Firstly: investing in an amount that has not been allocated for this purpose, and it is one of the most prominent points that Behavioral Finance concept addresses, for example: who invests with a           with money meant to pay off an educational tuition or , a house, a car, etc., this amount is linked to the investor’s feelings, as he is dominated by the element of tension and fear of losing Money will therefore have to be very careful in their investment choices. To avoid this, it is better for the person to allocate an amount separate from financial obligations so that he/she has the freedom to act of it and be free from stress.

Secondly: Not knowing the financial statements and news of the selected company. Some investors may base their investment decision on the strength of the company’s brand, believing that it is a sufficient reason to trust the company and invest. There is no doubt that the brand is a strong advantage, but many companies seem attractive from a superficial view, and whoever delves into its analysis may change that investment decision. It is not necessary for the individual to be a financial or investment specialist to practice analysis, as there are some simple calculations that the individual may calculate from the financial reports of companies and then build his decision based on his/her conclusion. For example, but not limited to, the cash flow statement is one of the most critical statements because it is an indicator of the company’s cash position. The presence of sufficient cash at all times enables the company to pay its expenses and bank loans and expand its operations by purchasing new assets.

Third: Omission from the market in general, whether the investment is local or foreign. Insight into the market of that country is one of the most prominent indicators that may inspire an individual to invest in a particular sector or to avoid another sector for a temporary period. Here lies the secret in choosing the appropriate timing for investment or withdrawal.

Lastly, for those whose goal is to own assets and grow wealth: I have previously written that a little permanent is better than a lot that is discontinuous, so making investment a habit where a person invests with simple capital on a continuous basis is often the best way to grow wealth as a person avoids restricting themselves to the conditional idea of ​​a large financial surplus to start his/her investment.