The 20 Most Common Investing Mistakes

Diversifying prevents a single stock from drastically impacting the value of your portfolio.

It’s easy to focus on the short term, but this can make investors second-guess their original strategy and make careless decisions.

Investor behavior during market swings often hinders overall performance.

One study shows that the most active traders underperformed the U.S. stock market by 6.5% on average annually.

Fees can meaningfully impact your overall investment performance, especially over the long run.

While tax-loss harvesting can boost returns, making a decision solely based on its tax consequences may not always be merited.

Review your portfolio quarterly or annually to make sure you’re staying on track or if your portfolio is in need of rebalancing.

Too much risk can take you out of your comfort zone, but too little risk may result in lower returns that do not reach your financial goals. Recognize the right balance for your personal situation.

Often, investors don’t actually know the performance of their investments. Review your returns to track if you are meeting your investment goals, factoring in fees and inflation.

Negative news in the short-term can trigger fear, but remember to focus on the long run.

Historically, inflation has averaged 4% annually.

Value of $100 at 4% Annual Inflation

After 1 Year: $96

After 20 Years: $44

Market timing is extremely hard. Staying in the market can generate much higher returns versus trying to time the market perfectly.

Check the credentials of your advisor through sites like BrokerCheck, which shows their employment history and complaints.

Taking the time to find the right advisor is worth it. Vet your advisor carefully to ensure your goals are aligned.

Although it can be challenging, remember to stay rational during market fluctuations.

High-yielding investments often carry the highest risk. Carefully assess your risk profile before investing in these types of assets.

Consider two people investing $200 monthly, assuming a 7% annual rate of return until the age of 65. If one person started at age 25, their end portfolio would be $520K, if the other started at 35 it would total about $245K.

While no one can predict the market, investors can control small contributions over time, which can have powerful outcomes.