6 Common Mistakes Beginner Investors Make

If you want to invest as an expat or high net worth person, which is what I specialize in, you can email me (advice@adamfayed.com) or use WhatsApp (+44-7393-450-837).


Below are some common investing mistakes that are often made by investors new to the investment scene. However, this article isn’t limited to rookie blunders, as even veterans can run into any of these mishaps if they don’t exercise enough caution.

Common mistakes in investing: perspectives and risks

You’re finally reaching the point where you’re thinking about settling down—perhaps not exactly getting married—but rather getting your priorities straight, stopping your excessive and impulsive shopping, making your first investments. You read a little bit about Savings and Investing 101, then you take the plunge and find yourself at a loss at how easily your hard-earned money can be drained.

The first investment can be very interesting, especially if you calculate all the possible returns that you can get. You choose from a variety of assets and additional sources of income such as real estate, stocks, mutual investment funds, and goods. You even hear about how much money someone has made using a bot for foreign stock trading. You’d think it would be easy considering just the growth of the market and the amount you should have made based on someone’s story.

But while the market may seem stable and strong, it is not without its risks, as it can easily collapse and leave your investments in a rut. Even analyst forecasts for an upward trend can be instantly changed by a combination of economic and political factors, and then changes in the general market mood and appetite.

Investments always carry certain risks. Image by rawpixel.com on Freepik

Below are six common mistakes that first-time investors make:

  1. Follow the crowd
  2. Things are in a hurry
  3. Failed to diversify
  4. It goes all in
  5. Excessive emotionality
  6. Not investing at all

Common Investing Mistakes: Following the crowd

Blindly following the decision of the majority whether to invest in something or not can be very dangerous. While it may seem like you’re making the right choice along with a significant number of other investors, the so-called “fear of missing out” on what’s trendy or popular in the market, as well as uninformed calls, can lead to devastating results.

American business magnate and investor Warren Buffett even said that investors should be “fearful when others are greedy and greedy when others are fearful.” When everyone else says it’s going to be great, try to pause and be skeptical. When everyone else is afraid, consider taking action. Think long term.

Also, every move you make in buying and selling should be carefully researched and backed up by a solid plan or strategy, as well as sound analysis from experts in the field. With the spread of fake news and the rise of social media influencers, be more careful about the information you collect.

Common Investing Mistakes: Rushing

You can’t take your eyes off your investments because you’re in such a rush to reach your goals and get rich. You can hardly wait to see some improvements and reap your profits, even if it was just yesterday when you made the investment.

While some choose to invest in shorter timeframes, many investments actually take time. You should be in it for the long haul. Yes, you can’t hold on to an investment forever, especially if you’re not getting anything in return. However, you should be patient enough to wait for the market to at least recover.

There is no one-sided market. Never throw away all your assets in a crash, especially if what you are experiencing is only permanent loss. Accept that for most, financial freedom it is not a simultaneous goal.

Diversification is a common investment mistake
Diversified investments. ©Shutterstock

Common Investing Mistakes: Failure to diversify

If one of your investments fails, say if the rent falls and negatively affects the real estate that you have invested y, having diversified products in your portfolio can minimize risks and save you from possible significant financial losses.

That’s great investment strategy across sectors and to avoid putting all your money into one industry or product. Having a wide range of products in your investment basket can also help you recover faster if you lose money.

Common Investing Mistakes: Going all-in

Ignoring or deliberately ignoring immediate needs and expenses in order to put all your money into investments, hoping for the best, is also unacceptable. Don’t over invest. Such a decision should not exceed what is necessary and what you can afford to wait and even lose.

Having a cash reserve can prove to be very effective as it keeps your finances from being overburdened and keeps you out of debt. It can also provide an opportunity to enter a particular investment when prices fall and become even more affordable.

Common Investing Mistakes: excessive emotionality

When you make investment choices, you should not be guided by your emotions. You can’t win anything if you have panic attacks every time the market sees a slight drop and if you want to sell your assets at the mere hint of a crash.

Learning the psychology of investing will help you weather the ups and downs of the market and teach you how to best behave to avoid harm to your finances.

Common investing mistakes are driven by emotions
Being too emotional. Image by cookie_studio on Freepik

Common Investing Mistakes: Not investing at all

You want to play it safe. You tell yourself that you will invest as soon as the “time is right” – before you miss the chance. You like to wait until prices are falling, but when they do, you think they can still fall further, so you better wait a little longer. You think you can’t afford to lose, so you’d rather keep your extra money in the treasure chest.

Remember, not taking a step is still a step. At whatever age you come to understand the whole point of investing, know that you have to take action and be responsible for it. Invest something to earn something else. Be prepared to take more risks – regardless of the fact that later it will be a bitter lesson of dos and don’ts.

Common Investment Mistakes: Other Tips

Determine your current stage in the investment life cycle, what your goals are and how much you need to invest to reach them, before it’s too late. Seek the advice of a trusted financial planner if you do not feel competent in this matter.

Also, keep in mind why you are investing your money. By doing so, you’ll be motivated to save more and may find it easier to choose an appropriate allocation for your portfolio. Watch your money in the market and consider previous market performance when adjusting your expectations.

You may decide to add more as your income increases. Before the end of each year, review the performance of your investments. Note that it is unrealistic to expect your portfolio to make you rich overnight. Wealth will accumulate over time through a sound investment approach over the long term.

It’s inevitable that you’ll feel like you want to take more risks and sometimes you’ll be tempted to spend money. Instead of being too rigid and trying so hard to resist it, you can accept this scenario and save some money for fun. This is money you can completely forget about, something you can afford to lose. Just make sure that this amount does not exceed 5% of the entire investment amount.

Common Investing Mistakes: Final Thoughts

Investment mistakes can happen to anyone, even experienced investors. Get trapped and lose money can happen if you are new to the field. It will hurt. Not a single investor not only won and lost nothing in the whole process. But that should be okay. Congratulate yourself on this bold step. This is something to be proud of.

When you do get back into work, know that there are many resources that can help you do so investment and leadership you every step of the way if that’s what’s right for you. I can be that guide too, so don’t be afraid to contact me if I can advise you on yours financial decisions.

If you want to know more about investing, you can read our other articles like best investment options for Australian expats in 2021 which are the best investment options for Canadian expats in 2021which are the best investment options for British expats in 2022 and how invest in the S&P 500 from outside America.

Do you suffer from financial indecision? Want to invest with Adam?

Adam is an internationally recognized financial author, with over 461.9 million answer views on Quora.com and a best-selling book on Amazon

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