Reasons Why You’re Getting No Returns On Stock Investments
The hope of reaping higher returns draws most people to stock market investment platforms. However, there are times when, no matter how much caution an investor practices before they invest in the stock market, returns seem to take a downturn, and investments are lost. Today, we’ll explore the possible reasons for this waywardness.
Broadly categorizing, there can be two types of reasons why investors might be getting no returns after they buy stocks – reasons that are in an investor’s control and reasons that are beyond their control.
Reasons that are within an investor’s control:
- Wrong trading platform:
Many trading apps have emerged to provide this service because of people’s increased interest in buying shares. A downside of this increase in interest in developing stock trading platforms is that they overwhelm the investors with too many options. When an investor trades through a trading app or platform that performs poorly, has fewer analytical tools, updates infrequently, and shows inaccurate data, investors are bound to make wrong investment decisions. Sometimes, a trader needs to switch to a different platform to get more insights about their investment decisions. Using a stock screener can also be a great way for investors to select which stocks will meet their targets.
- Lack of patience: When investors buy stocks after they open Demat account, they may notice that stock performances are prone to fluctuations daily. Seeing a stock perform poorly can make investors feel less confident about their investment decision. They may end up abandoning or selling off that stock in fear of the value going lower. If the investor does not have the patience to hold onto their stocks for the long term, they may not gain returns. The value of stocks can fluctuate in the short term, but over the long term, they tend to increase in value.
- Wrong timing:
If the investor decides to buy shares at the wrong time, they may not gain returns. For example, suppose the investor buys a stock just before a major event that negatively affects the market, such as a recession or a major political event. In that case, the stock may decrease in value, and the investor may not gain returns.
Reasons that are beyond an investor’s control:
- Accounting fraud:
A company that registers its financial statements incorrectly can easily manipulate its valuations. It might make the investors feel that the company’s stocks are more profitable than they are. These stocks are usually overvalued. Overevaluations are not directly in the investor’s control, but data verification is. Before making any investment decision, an investor must verify that the financial statements are correct. If the investor buys a stock at a price that is too high, it may take longer for the stock price to increase, and the investor may not gain returns.
- External events:
Events like a war, pandemic, or disaster can result in political and economic disruptions. It takes work to predict the correct timing of such events. When these events occur, an investor might see a low stock performance and may not gain higher returns on investments made during the disruptive period. If an economy goes into recession due to such events, companies will likely integrate strategies to minimize their losses. Such strategies can include dividend cuts, leaving investors with lower returns.
To sum up, there can be many reasons an investor is unsuccessful at generating higher returns on their investments. However, every investor must do what’s in their ability to ensure they’re making the right investment decisions at the right time.