Investing in the stock market can be a great way to grow your wealth but it’s not without risks. Prashant Khemka the founder of WhiteOak Capital Management has decades of experience in global markets. In a recent interview he shared three common mistakes investors often make and how to avoid them.
1. Trying to Time the Market
One of the biggest mistakes investors make is trying to predict the perfect time to buy or sell stocks. Khemka says this is a trap. People often react to news like economic changes or global events and sell their stocks out of fear or wait too long to invest hoping for a “better” moment. But guessing the market’s moves is nearly impossible. Khemka points out that even experts get it right only about half the time. Instead of trying to time the market he suggests staying invested for the longterm. Markets go up and down but over time they tend to grow. By staying disciplined and avoiding emotional decisions you can benefit from this growth.
2. Borrowing Money to Invest
Another mistake is borrowing money to invest in the stock market. Khemka warns that this is risky because the market is unpredictable. If you borrow and the market drops you could lose more than your investment and still owe money. For example if you take a loan to buy stocks and those stocks fall in value you will need to repay the loan with interest which can wipe out your savings. Khemka advises using only the money you can afford to invest. This way even if the market dips you won’t face financial stress. Safe investing means playing with what you have not what you owe.
3. Putting All Money in One or Two Stocks
The third mistake is putting all your money into just one or two stocks or sectors. Khemka calls this “buying a lottery ticket” because it’s highly risky. For instance if you invest everything in one industry like technology and that sector crashes you could lose most of your money. He shares an example of someone who invested heavily in biotech stocks just because they liked the idea without understanding the risks. To avoid this Khemka recommends diversifying your investments. Spread your money across different companies and industries, like healthcare, finance and consumer goods. This reduces the risk because if one sector struggles others may still perform well.
How to Invest Smartly
Khemka’s advice boils down to three simple principles stay disciplined, avoid borrowing and diversify. Don’t let fear or excitement drive your decisions. Invest for the longterm use your own money and build a balanced portfolio. By following these steps you can navigate the unpredictable market with confidence.
Prashant Khemka’s insights come from years of experience and his advice is clear avoid these common mistakes to build wealth steadily. Start small, stay patient and keep learning to make smarter investment choices.