10 Investing Mistakes to Avoid (and How to Fix Each One)

Capital at risk. Investments can fall in value and you may get back less than you put in. This is general information, not personalised advice.

The ten investing mistakes that cost ordinary investors the most are: trying to time the market, selling after a fall, paying high fees, owning too few holdings, owning too many overlapping ones, skipping tax-advantaged accounts, checking prices too often, buying last year's winner, investing without a written plan, and waiting to start. Most of them are behaviour rather than knowledge, which is why each fix below is a rule you set in advance. Where a cost is shown, it is worked out from stated assumptions so you can check the arithmetic; the returns used are illustrations, not forecasts.

1. Trying to time the market

The idea is to sell before a fall and buy back before the recovery. It requires being right twice, and the largest daily gains tend to come during the same volatile stretches that frighten people out of the market.

What it costs (worked): suppose a market returns 10% in a year, and three days in that year each rise 3%. An investor who was out of the market on just those three days earns 1.10 ÷ (1.03 × 1.03 × 1.03) − 1, which is about 0.7% for the year instead of 10%. A handful of missed days can erase most of a year.

The fix: invest on a fixed schedule with an automatic plan, and decide in writing that you will not move to cash because of a forecast.

2. Selling after a fall

A fall is only a loss on paper until you sell. Selling and waiting until it "feels safe" usually means buying back at a higher price.

What it costs (worked): you own 1,000 units of a fund at 100 (100,000). The price falls to 70 and you sell for 70,000. You buy back once it has recovered to 84, which gets you 833 units. When the price returns to 100, you have 83,333; had you held, you would have 100,000. The round trip cost 16,667 even though the price ended where it started.

The fix: write down, while markets are calm, what you will do in a fall ("keep contributing; rebalance once a year"), and read it before acting. The psychology of investing explains why this is harder than it sounds.

3. Paying more in fees than you need to

A percentage fee is charged on the whole balance every year, so it grows with your money.

What it costs (worked): 500 a month for 30 years (180,000 paid in), assuming 6% a year before fees, compounded monthly:

The difference is 81,352, from a fee gap of less than one percentage point. In 2025, the asset-weighted average expense ratio was 0.05% for index equity mutual funds and 0.64% for actively managed ones, according to the Investment Company Institute.

The fix: find every cost — fund charge, platform fee, trading costs, currency conversion — using fund costs: TER, tracking difference and spread, and compare like with like.

4. Owning too few holdings

One company, one sector or one country can fall a long way and stay down. Holding your employer's shares adds a second link: the same event can hit your job and your savings at once.

What it costs: with a single share, one bad outcome can wipe out a large part of the portfolio. In a fund holding thousands of companies, one company's collapse is a small fraction of the total.

The fix: use broad funds as the core, cap any single share at a level you could afford to see halve, and check how much of a "global" fund sits in one country — home bias in your portfolio shows how to measure it.

5. Owning too many overlapping funds

Owning a total-market fund, an S&P 500 fund and a large-cap growth fund means owning many of the same companies three times. It adds paperwork and fees without adding much diversification.

What it costs: each extra fund adds its own charge and its own tax records, and the overlap makes it hard to see your real allocation.

The fix: a three-fund portfolio — home stocks, international stocks, bonds — covers the main building blocks. A target date fund does it in one.

6. Skipping tax-advantaged accounts

Most countries offer accounts where investments grow free of tax, or where tax is deferred: in the US, 401(k)s, IRAs and HSAs; elsewhere, accounts such as ISAs, TFSAs or pension wrappers. Investing through an ordinary taxable account first usually means paying tax on dividends and gains every year that you did not need to pay.

What it costs: the tax on each year's dividends is money that is no longer invested, so the gap compounds over time. The size depends entirely on your country's rules and your tax rate.

The fix: fill the tax-advantaged allowances available to you before a taxable account — in the US, typically taking any employer match first — and use asset location to decide which holdings go where.

7. Checking prices too often

Daily price checks show mostly noise, and every glance at a fall is an invitation to act on it.

What it costs: more trades, more spreads and taxes, and more chances to make mistakes 1 and 2.

The fix: look quarterly at most, and only do anything on a pre-set date, such as an annual rebalance.

8. Buying last year's winner

A fund that topped the table last year often had a style or sector that happened to be in favour. That rarely repeats on schedule. In 2025, 79% of actively managed US large-cap funds returned less than the S&P 500, according to S&P Dow Jones Indices' SPIVA scorecard, so choosing an active fund on last year's results is choosing from a small minority after the fact.

What it costs: buying after a strong run and selling after a weak one means buying high and selling low.

The fix: choose funds on cost, what they hold and how they fit your plan — not on recent returns. The evidence is laid out in index funds vs actively managed funds.

9. Investing without a written plan

Without a plan, every headline becomes a decision.

What it costs: it is the mistake that makes the others likely, because there is nothing to check an impulse against.

The fix: write one page: your target mix of shares and bonds, the funds you use, how much you add each month, when you rebalance, and what you will do in a fall. Change it only on a set review date.

10. Waiting to start

Waiting for a dip, a pay rise or more knowledge costs the one thing that cannot be recovered: years of compounding.

What it costs (worked): 500 a month, assuming 5.95% a year after a 0.05% fee:

The earlier start pays in 30,000 more and, on these assumptions, ends 278,141 higher. Real returns will differ, but the advantage of time holds whatever they are.

The fix: open the account and set up a small automatic contribution now; raise it later. If you are still choosing a provider, the broker checklist takes one evening.

What the ten have in common

Each mistake replaces a rule with a reaction. The fixes are mostly decisions made once, in advance: automate contributions, keep costs low, hold broad funds, use tax wrappers, and write down what you will do when markets fall.

A practical check for several of these

Mistakes 3, 4 and 5 often come down to not seeing what you actually hold. AI-assisted tools like PopAI Pro Sheets can pull your positions together and flag overlap or fee drag — a useful periodic check rather than a reason to look at your portfolio daily.

Frequently asked questions

What is the biggest mistake new investors make?

Selling after a fall is usually the most expensive, because it turns a temporary paper loss into a permanent one. The worked example above shows a round trip costing 16,667 on 100,000 even though the price ended where it started.

How much do investment fees really cost?

More than the percentage suggests, because the fee is charged on the whole balance every year. On 500 a month for 30 years at an assumed 6% before fees, a 1.00% fee leaves 81,352 less than a 0.05% fee.

Is it better to wait for a market dip before investing?

Usually not. Waiting means missing gains while you wait, and nobody can reliably say when a dip will come. Starting five years later, on the assumptions in mistake 10, leaves 278,141 less after 30,000 less paid in.

How often should I check my investments?

Quarterly at most for most long-term investors, with any changes made only on a set date such as an annual rebalance.

This article is for informational purposes only and does not constitute financial advice. Always consult a qualified financial adviser before making investment decisions.

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