Top ten investment traps

EVERYBODY makes mistakes, but when they are an investor a loss of money is usually involved.

While learning from your own errors is part of becoming a good investor, understanding what has burned others in the past can save you plenty.

Marinis Financial Group financial strategist Theo Marinis said it was human nature to make mistakes.

"If you're smart, you learn and grow from them,' he said.

"What I can't stand is people who make the same mistakes over and over again - that's the definition of insanity.''

Here are 10 investment mistakes that everyone should try to avoid.

No research

Investing blindly is just asking for trouble.

Commonwealth Financial Planning senior financial planner Janet Webber said would-be investors needed to take time to educate themselves in the fundamentals.

She said the internet was a good place to start, with sites such as www.asx. com.au providing a valuable source of information.

"It is essential to be able to make informed decisions such as what you want to invest in, the level of risk you are willing to take and the amount of money you want to put into an investment,'' she said.

Following a hot tip heard from a friend could be dangerous.

Ms Webber said people wanting to take a chance with a stock tip should find out if the company was in a growing industry, whether it was profitable, whether it had any problems in the past and whether it had a high price-earnings ratio.

"If the person giving you the hot stock tip does not provide you with the answers to these simple questions, don't take their tip too seriously,'' Ms Webber said.

Read more here : 10 investment mistakes that everyone should try to avoid.