20 Common Investing Mistakes that Even Experienced Investors Make

Updated: September 7, 2022

The most common mistake that people commit when it comes to investing is probably waiting too long to start.

Warren Buffett purchased his first stock and started investing at the age of 11. And yet, despite that fact, he still wishes that he started sooner.

If you’re not yet investing, then you should really start soon. And then, prepare to avoid these other common investing mistakes.

1. Investing without a clear financial goal.

They are called investment vehicles because they’re supposed to bring you to a destination. If you don’t have a financial goal, then any investment becomes a good investment.

2. Paying too much in fees and commissions.

3. Forgetting about inflation.

A small difference in fees between two investments can accumulate and compound over time. So, make sure that you consider them when making your investment decisions.

Moreover, inflation can erode your investment gains over the years. Be sure to include it in your investment planning or else you’ll find yourself short of your target amount when you already need the money.

4. Jumping on the bandwagon of a trendy investment.

5. Forgoing due diligence.

New investment opportunities arise every so often. And it’s tempting to put money in them because everyone is talking about it. Don’t blindly chase trends.

A popular investment doesn’t always mean that it’s a good investment for you. Always check if this new investment can help you reach your financial goals faster than your current ones.

This follows that it’s important to do your due diligence and study the company first, especially if it’s a new investment opportunity.

6. Failing to diversify.

We all have favorite investments, mine are stocks. But this doesn’t mean that all my money is in the stock market. Make sure to have a balanced and diversified portfolio to manage your risk.

7. Becoming too emotional.

8. Reacting to the media.

It’s normal to become emotional about money, but your feelings shouldn’t dictate your investment decisions. Always be objective and never buy or sell based on fear or greed.

Oftentimes, these emotions are triggered by the media. So temper your reactions whenever you receive good or bad news about the market or current events, especially politics.

9. Expecting future performance to be the same as the historical returns.

Historical returns are useful in choosing which investments to consider, but never expect that they will perform the same way in the future. Nothing is ever sure in the market.

10. Following a complicated strategy

The best investment strategy is the one that you can follow. When you make things complicated, there’s more risk of making a mistake in your analysis or planning.

Moreover, markets constantly change, so it’s best to come up with an investment strategy that you can easily adapt to these changes.

11. Trying to beat the market (or other investors).

12. Becoming greedy.

The reason why you’re investing is that you want to afford your financial goals. The goal is not to beat the market nor to make more money than your friends or colleagues.

When you reach your target price, then it’s time to take your profits. Don’t chase yields and never give in to your greed because if the market suddenly reverses, you’ll be left with nothing but regrets.

13. Refusing to let go of a bad investment.

14. Waiting to break even.

Everyone, including experts, make mistakes. So, if you see that you’ve made a bad investment decision, then don’t let your ego stop you from cutting your losses.

If you’re considering waiting until at least, you reach breakeven — don’t. Instead, as a compromise, just give yourself a hard deadline and let go of your investment when the date comes.

15. Falling in love with their investment.

Falling in love with your investment means refusing to let go when it’s already losing money; refusing to take profits when it’s already hit its target price, or constantly investing in it even if other investments are better.

16. Failing to monitor their portfolio.

Don’t “set and forget” your investment portfolio. It’s not like wine where you take it out only when you already need it. Investments are more like plants, which need care.

17. Failing to implement a strategy during hard times.

Long-term investors will experience periods of economic uncertainties and market volatilities. It helps to be both optimistic and realistic during these times.

Hope for the best, but have a well-thought contingency plan in case things don’t go as expected.

18. Becoming impatient.

Time is your ally in building wealth. And it’s important to let time do its work. When you’re feeling impatient with your investments, shift your focus towards building a new source of income instead.

19. Not investing more when they can afford it.

You have your usual needs and regular wants. When there’s still money left after spending on these, don’t immediately create more wants. Instead, invest more (or maybe use the money for charity).

20. Forgetting to continue learning.

Constantly invest in your financial education. Study history and learn from the lessons of the past. Keep yourself updated on new technologies and future opportunities. Never let your financial knowledge become obsolete.

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