Most of you who are reading this article might be investors – some small and some big, some risk takers and some risk averse. But there is something definitely common among all of you in the way you invest. It’s sad though that the point of commonality is the mistakes you make.

Small blunders that cost you a lot. And everybody does the same. Sometimes the funniest part is that you do it because somebody else has done it. Not beating around the bush lets come to what are the simplest things one needs to remember while dealing in investments.

You are the best judge – More often than once, we decide in what to invest based on what others have done or told us. But everybody’s requirements are different and it is best to decide for your self, how you want to use your money. You are the best judge for the amount of risk you want to take and the returns that you require to keep you going the way you want to. The best example of this herd mentality is how the investors are running after the software IPOs today.

Panic Selling – Typical with a stock market investor. If the price of a share is falling, people tend to sell with the fear of further depreciation. But little do they realize that if the company is fundamentally strong and the price is falling, it is the time to BUY. Because after the cycle is through, the price will rise again.

Don’t be emotional – Aren’t we Indians known as emotional fools? But don’t let this quality affect your investment decision. Don’t put your hard-earned money in a company just because your brother happens to be the CEO. Tomorrow, if the company goes down, you lose your brother along with your money.

Risk & Return – Strike the right balance between the risk and the return of your investment. As an individual investor, it is never safe to put your money in very risky investments. Just like they say – Speed Thrills but it also Kills.

Diversified Portfolio – Never put all the eggs in one basket. A scheme might be doing very well, but it is always better to have a part of your fund in a not-so-doing well kind of scheme too. The ideal avenues one should look for are equity, debt, bank investments, insurance and mutual funds.

Buy a company not a stock – When you invest in equities, remember that you are investing in a business and not just in a piece of paper. Invest in businesses that you understand. As Warren Buffet puts it, "I only invest in companies whose business ideas I can explain with a piece of chalk."

Set target returns – Always set target returns for yourself and exit the investment the moment you attain that target return. In the greed for higher returns you may end up losing your shirt.

So next time you invest, just think twice. Assure yourself that you are on the right track. The path of somebody else might not always be yours too.

Tanuja R. Nemivant