# Investing during a still-evolving pandemic: 4 money mistakes you should avoid
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-06-25
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Avoid These Money Mistakes During Pandemic: Expert Advice
Meta Description: Learn about avoiding unnecessary diversification and increasing risks in investments to safeguard your money during the pandemic. Read more on Kalkine Group.
URL: https://financedigest.com/investing-during-a-still-evolving-pandemic-4-money-mistakes-you-should-avoidhtml

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_By **Kunal Sawhney,** CEO, Kalkine Group_

People often find it difficult to factor in the risks when it comes to investing in shares, mutual funds, debt instruments or other market-tradable securities. Typically, the consistency in the historical returns over some years drives many individuals to believe that a particular asset will continue to deliver such a rate of return in the upcoming duration.

Ascertaining various limitations and risks with [investing becomes](https://www.financedigest.com/volkswagen-to-invest-in-mines-in-bid-to-become-global-battery-supplier.html "Volkswagen to invest in mines in bid to become global battery supplier") more important at a time when every asset has turned highly volatile due to the repercussions of the still-evolving coronavirus pandemic. As most of the enterprises remain susceptible to the near-term developments in the Covid activity, the various unbearable [mistakes with regard to money management should be avoided](https://www.financedigest.com/how-banks-can-avoid-regulatory-reporting-mistakes-with-a-good-dose-of-automation.html "HOW BANKS CAN AVOID REGULATORY REPORTING MISTAKES WITH A GOOD DOSE OF AUTOMATION") in order to safeguard your liquid money, which can be utilized during an unforeseen emergency.

We take a look at four such money mistakes [that should be strictly avoided](https://kalkinemedia.com/education/investing-essentials/three-investing-blunders-an-investor-should-avoid) when the pandemic is taking a U-turn in many developing, as well as developed economies, especially the UK, following the steep resurgence of coronavirus cases associated with the Delta variant and other variants of concern.

![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/spon-450x600-1736838263475-compressed.jpg)

Kunal Sawhney, CEO, Kalkine Group

**Unnecessary diversification**

Diversification of the asset pool is always advisable for all investors, no matter if you’re a retail participant or have the capability to [buy a sizable stake](https://www.financedigest.com/mfe-offers-to-buy-1-05-stake-in-mediaset-espana-from-vivendi-ahead-of-delisting.html "MFE offers to buy 1.05% stake in Mediaset Espana from Vivendi ahead of delisting"). Diversification of assets certainly minimizes your overall [risk by spreading the uncertainty](https://www.financedigest.com/brexit-and-global-uncertainty-mean-currency-risks-lie-ahead.html "Brexit and global uncertainty mean currency risks lie ahead") to various assets. A person [invested in about a dozen of different securities](https://www.financedigest.com/ils-investment-returns-continue-to-outperform-according-to-aon-insurance-linked-securities-report.html "ILS investment returns continue to outperform, according to Aon insurance-linked securities report") of varied nature can make an ideally diversified portfolio, but the number of assets and the specific securities you choose should remain well within your controlling limits.

Inferentially, you should not over-diversify [in order to beat the market uncertainty](https://kalkinemedia.com/education/investing-essentials/avoid-these-investment-mistakes-to-turn-your-fortunes-around-in-2021). It will only lead to unforeseen damages as no human being can actively tap a large number of assets, nor can they track all the developments which may or may not affect the respective asset type in which you have [invested or planning to allocate money](https://www.financedigest.com/ethical-property-investment-can-your-money-do-more.html "Ethical property investment: Can your money do more? ").

Therefore, you should only invest in the assets that you can control or [manage](https://www.financedigest.com/plastic-antibody-developer-strengthens-board-following-further-investment-from-mercia-fund-management.html "“Plastic antibody” developer strengthens board following further investment from Mercia Fund Management") during the predefined period of your investment. Unnecessary diversification will cause more harm than it will benefit as some securities will remain unscrutinized during the course of investment, and you may never know when there will be a big correction in the indicative [market prices or the underlying values](https://www.financedigest.com/dental-3d-printing-market-to-reach-an-estimated-value-of-us-2-9-bn-by-2031.html "Dental 3D Printing Market to Reach an Estimated Value of US$ 2.9 Bn by 2031") of the assets you are holding in the portfolio.

**Increasing proportion of** [risky assets](https://www.financedigest.com/tough-times-and-risky-business-which-emerging-market-assets-are-a-bet-worth-taking.html "Tough times and risky business – which emerging market assets are a bet worth taking")

It seems quite easy and lucrative as well to make quick [money in a shorter period of time](https://www.financedigest.com/how-to-use-algorithms-to-save-time-and-make-money-when-trading-currency-crypto-shares-etc.html "How to use algorithms to save time and make money when trading (currency, crypto, shares etc)"). By only looking at the past performance of the assets, individuals hurriedly decide to invest a considerable amount from the [funds](https://www.financedigest.com/norway-wealth-fund-to-consider-investing-in-unlisted-equities.html "Norway wealth fund to consider investing in unlisted equities") they have or may be the entire chunk in a desperate attempt to join the bandwagon of people who have already made fortunes by investing in risky assets.

Higher the [risk on investment,](https://kalkinemedia.com/education/investing-essentials/what-is-options-trading-what-are-the-risks-and-advantages-involved) the higher can be the return. But the relative ideology doesn’t translate into profit all the [time as the assets have the liberty to move](https://www.financedigest.com/move-over-tina-its-time-for-tara.html "Move over TINA, it’s time for TARA") either side. Given the uncertainty and deprived [commercial operations](https://www.financedigest.com/iveco-to-transfer-nordic-retail-and-commercial-operations-to-hedin.html "Iveco to transfer Nordic retail and commercial operations to Hedin") of most of the businesses, there are higher chances that an asset may depreciate sharply in case of heightened volatility on account of a major disruption caused due to the unfolding nature of the coronavirus.

[**Investing on borrowed money**](https://www.financedigest.com/six-tips-for-saving-money-and-investing-wisely.html "Six Tips For Saving Money And Investing Wisely")

Nobody can time the market, even the big-ticket [institutional investors](https://www.financedigest.com/institutional-investors-to-increase-commercial-real-estate-allocation-but-brexit-is-biggest-challenge.html "Institutional investors to increase commercial real estate allocation but Brexit is biggest challenge"). The only thing we can [bank upon is the chances in connection](https://www.financedigest.com/how-banks-can-prioritise-the-connected-consumer-in-light-of-shifting-cultural-norms.html "How Banks Can Prioritise the Connected Consumer in Light of Shifting Cultural Norms") to a certain event. Considering the large number of factors that can affect the market prices of a security, it could be [way better if you invest](https://www.financedigest.com/10-ways-to-put-together-a-killer-investment-pitch.html "10 WAYS TO PUT TOGETHER A KILLER INVESTMENT PITCH") the money which you are comfortable in losing by a certain extent.

But it has been observed that people who have been following the [markets often want to maximize every opportunity that can provide multifold returns](https://www.financedigest.com/swiss-bank-ubp-returns-to-chinese-markets.html "Swiss bank UBP returns to Chinese markets"). Assuming that you are 100% correct with your intuition and the analysis you’ve done studying a particular asset. There is still a certain chance that your prediction or the well-calculated estimation may go wrong due to highly unpredictable events that have become very common these days.

Therefore, investments should not be made through borrowed [money as you may end up paying unwanted interest charges according to the stiff repayment terms of the banking](https://www.financedigest.com/marketmind-banks-are-leaking-money.html "Marketmind: Banks are leaking money") partners, even in the current regime of low-interest rates. Investing on borrowed money is a strict no, whether you have taken a loan, a short-term [credit facility](https://www.financedigest.com/inshur-closes-7m-series-funding-2m-credit-facility.html "INSHUR closes M in Series A funding and a M credit facility") at low rates, money from a friend or family member or a loan against any other valuable asset.

**Repeatedly exceeding budget**

Overspending has been one of the most traditional mistakes of many individuals, following which they tend to miss on periodic [investment that they have started with a financial](https://www.financedigest.com/how-financial-services-leaders-can-prioritise-cybersecurity-investment.html "How financial services leaders can prioritise cybersecurity investment") entity. If you are exceeding your budget month-after-month, then there is a definite possibility that you may end up exhausting your retirement kitty and other reserved [funds designated for the emergency](https://www.financedigest.com/where-can-you-start-building-your-emergency-funds.html "Where Can You Start Building Your Emergency Funds?").

Forget about missing the timely payment for policies and other instruments, the ingrown habit of spending beyond your earning capability can have a hazardous [impact on your financial health](https://www.financedigest.com/the-impact-of-debt-on-your-health-and-what-you-can-do-about-it.html "The Impact of Debt On Your Health, And What You Can Do About It").

Buying unnecessary products or incurring [huge amounts for availing of inessential services in a time of uncertainty can hamper your monthly](https://www.financedigest.com/investors-flee-uk-bonds-pushing-gilts-to-huge-monthly-loss.html "Investors flee UK bonds, pushing gilts to huge monthly loss") budgets, following which you are highly likely to default on an existing debt obligation, miss a credit card bill, miss a periodic payment for the mutual fund scheme and may go broke much before the month-end.

These situations will lead you to borrow more, that too on high-interest rates that will [ultimately eat all your forthcoming earnings if the habit remains uncorrected for a longer period of time](https://www.financedigest.com/ultimate-guide-home-insurance-tips-for-first-time-buyers.html "Ultimate Guide: Home Insurance Tips for First Time Buyers").

**This is a Contributed Article**


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