Warren Buffett is one of the wealthiest and most successful investors in the world. He’s extremely cautious when it comes to investing especially when it comes to businesses you have little knowledge of. What this simply mean is that, you shouldn’t be buying stocks in companies if you do not have thorough knowledge or understanding of their business models.

One of the best ways of avoiding this is by building diversified portfolio of ETFs which stands for Exchange-Traded Funds or also called as Mutual Funds.

If you invest in individual stocks, then be sure that you have broad information on every company those stocks are representing before making any investments.

Immediately Trusting a Company

Most of the time, whenever we see a company that we have invested to do well, it is fairly easy to put our 100% trust in them and forget that we have bought stock as a form of investment. Always keep in mind that you have bought the stock in order to make money. Don’t put your emotions in play because that is going to compromise everything.

Placing too much Investment

Jumping in and out of position or turnover is also another known return killer. Unless you are an institutional investor who has the benefit of having low commission rates, then the transaction costs could eat you alive. Not to mention, short term tax rates as well as the opportunity cost of missing long term gains in exchange of good investment would make you regret your decisions.