Everyone enters the capital market hoping to grow their money beyond its current amount. However, not everyone who joins will make a profit because investing carries risks. Especially now, with the stock market highly volatile, even buying the same stock at the wrong time can easily cause losses.
Since investing is never easy, investors need constant reminders. Thairath Money has compiled 8 common mistakes that can cause investors to suffer losses, all in one place.
1. Buying based on stock tips
Many have seen lottery tip sheets from various pages predicting winning numbers; stocks have similar tip sheets. If we buy stocks just following others' recommendations without knowing or studying them, we may unknowingly become trapped holding losing stocks.
2. Not selling means no loss
Have you ever bought stocks following a friend, only to see the price drop sharply by 20%? The mindset of “not selling means no loss” can cause even greater pain because the stock's value has already declined. If the stock was bought just by following a friend without fundamental research, cutting losses might help reduce damage and free up money to invest in better stocks. However, in such cases, we need to analyze how well we studied the stock and why we bought it. If the company’s financials and outlook seem promising but are only temporarily affected by adverse factors, holding on or following a plan until reaching a target profit might be better.
3. Using DCA without choosing wisely
New investors often hear about Dollar-Cost Averaging (DCA), which involves investing consistently over time to average out costs. Regardless of whether stock prices rise or fall, regular purchases help achieve an appropriate average cost in the long term. But DCA does not guarantee profits if the chosen stocks or assets do not grow. Instead of growing, your money might suffer losses unknowingly. Therefore, it’s essential to do your homework and carefully select stocks or assets before investing.
4. Psychological trap: buying on rises, selling on drops
When the market is bullish, everyone wants to invest hoping for higher profits. But if stock prices decline and investors are unprepared, many sell at a loss. This is a psychological trap often experienced by novice investors. The solution is to study and plan ahead. For example, if buying stocks for short-term gains, set clear targets for selling at a certain price drop or gain to avoid panic decisions.
5. Not accounting for fees
Every stock transaction or even switching mutual funds incurs fees. If you don’t calculate these carefully, expected profits can turn into losses due to fees.
6. Forgetting about taxes
For dividend stocks or foreign stocks, always plan for tax calculations, especially if you have income from abroad such as capital gains. Bringing profits into Thailand may require personal income tax declarations at progressive rates up to 35%, depending on total income. Additionally, mutual fund investors might choose funds that offer tax benefits like RMF or Thai ESG funds to maximize investment value.
7. Wanting to buy high-risk funds so overstating your risk tolerance
Before buying mutual funds, investors usually complete a risk tolerance assessment. Some may already have a fund in mind and deliberately answer the questionnaire to reflect a high risk tolerance to qualify, even though they cannot truly handle such volatility. When the fund’s value drops significantly, this can cause anxiety or force them to sell at a loss.
8. Waiting for the perfect timing to buy, which may not exist
Many hold cash waiting to catch the market’s lowest point, hesitating to invest. Later, the stock or asset price rebounds, leaving them to miss out. Timing the market is difficult, so it’s better to set clear investment goals, study the stocks or assets well to find prices you can accept, and gradually buy or use DCA instead.
Ultimately, investing always involves risk and uncertainty. Before investing in any stock or asset, it’s important to study and understand it thoroughly. Set clear investment goals and backup plans from the start, so if your portfolio falls, you can handle it better.
Information referenced from SET, the Thailand Value Investors Association, and the Financial Planning Association of Thailand.Read personal finance and financial planning news with Thairath Money to help you “achieve better finances and a better life.”
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