Investing on the stock exchange is such a popular method of building wealth for one uncomplicated reason: it works. However, there are many traps that can seriously reduce phrases and even cause loss. Here are five with which it is best to avoid by anyone who plans to buy shares.

Racing of noise inventory

The first mistake of the debutants to be avoided is the prosecution of Hyped-up. Personally, every conversation about the “Going To The Moon” campaign is a red flag for me! One that comes to my mind Trump Media & Technology Group. This is a company behind the social platform of President Donald Trump, Truth Social.

The shares increased by 38.5% in two years, but by 72% from March 2024. This variability is surprising, taking into account that the company has minimal revenues and publishes losses. The company will start storing bitcoins, which can work well. But if I started buying shares in July, I would avoid reserves of memes such as Trump Media.

Ignoring fees

Then ignoring the fees, which in time can really eat in return. One way to avoid this is to minimize the departure of the wallet (a lot of buying and selling). Investing in shares in a long term reduces the need for trade and outside positions.

All-in input

Another mistake of the debutants is to put the farm on one supply. Although there is a chance that it may pay off, it is also very risky and can cause lasting losses.

It is knowledgeable to build a different wrestling portfolio from different sectors. Mine consists of British dividend shares and US growth shares, as well as a handful of current funds (ETF) and investment funds.

Ignoring the valuation

A very common mistake of debutants is to ignore the valuation. Buying gigantic companies is only one side of the equation – the other does not overpay for them.

For example, this is clear to me Palantir“The world company Software SA. It grows very quickly because it helps organizations introduce artificial intelligence (AI) to their activities. It is an ambitious company run by Smart Founders, with seemingly long growing roads.

However, trade in shares at 104 -time sales. I think that this high valuation is very risky, especially if Palantir’s growth slows down.

I’m not looking for a moat

Finally, many beginner investors do not assess whether the company has an economic moat. In other words, a lasting competitive advantage that stops competitors at a distance.

One company that certainly has a deep moat is Amazon (Nasdaq: Amzn). It has a mass logistics network, which very few can match, and its main subscription service maintains hundreds of millions of customers devoted to the application.

He does me. These well -known brown boxes are a regular view of my driveway!

In addition to e-commerce, Amazon also has a dominant position in cloud processing through the division of AWS. In Q1, net sales increased by 9% to USD 155.7 billion, with AWS contributed to USD 29.3 billion (17% growth of the year).

The main closest risk here is the deterioration of the economic situation in the United States, and not the aid of President Trump by the tariff. It could that consumers withdraw from expenses.

However, the long -term prospects for Amazon growth remain sturdy and the revenues are subject to achievement $ 1 Until 2030! Shares are not commercial after a crazy valuation, so that it is worth considering, in my opinion.