35 Common Investment Mistakes to Avoid

Posted on June 11, 2020July 3, 2022 by investinternals

Do you have tasted any investment failure? Then this post is for you. This simple post listing 35 common investment mistakes of investors especially beginners. If you had any investment failure in present or past, undoubtedly you might have committed one or more of these mistakes!

Why do most investors fail? you know, behind every investment failure, there is history of committing investment mistakes knowingly or unknowingly. It can be anything, but committing mistakes during the analysis, stock selection, investment phases will certainly kickback investors with huge loss.

Why experienced investors advising to ‘read’?

Certainly you can find few links in this article. Yes, if you click it, you will be directed to Amazon. If you make a purchase through my reference, I will get a small commission. However, why should I refer a book to get small commission? Am I trying to just making money through adding few links in this article? Not at all. I am an investor from 1999 with credible investment history. I have already shared my strategies with various articles in this blog. Trust, the books what I am referring here is already in my hand and have read multiple times and thought to share because it would be a good reference for others too.

Every posts in this blog on investing, suggests the importance of learning through reading right materials or books. Frankly speaking, through reading books or blog articles, you are not going to be the next billionaire investor. No books have made millionaire or billionaire investors. However, through reading, you can learn about the costly mistakes and how to avoid that. It also help you to build your own investment strategies. Not only that, reading will help you to know how successful investors sensed and avoided serious investing mistakes and how they developed winning investment strategies!

Common investment mistakes to avoid

So, it’s the time to learn about the common investing mistakes investors make. Followed by my previous article, “20 Deadly investment mistakes“, this is another 35 common investment mistakes every investor should avoid. Great investors are aware about these mistakes and always taken care to not happen any of these mistakes to them.

There are funny examples given in brackets with each mistakes, so that you can enjoy reading with a smile in face.

Starting stock investment without any knowledge (Example: Misguided primary child reached to college and attending math lecture interestingly)
Investing without any goal (Example: Someone playing football but don’t know where is a goalpost)
Buying high and selling low (Example: Spending money from pocket to sell items to customers in a less price than bought)
Investing in penny stocks or micro caps (Example: Running throughout night to catch a fire worm by thinking it is a piece of gold)
Investing in unknown businesses (Example: Swallowing chilly sauce by thinking it is coca cola)
Listening to advisors and analysts (Example: Allowing someone to freely pick and spend your money)
Following the crowd (Example: Start crying by seeing someone crying but don’t know why)
Investing by following big investors (Example: Watching a flying helicopter through binocular and trying to catch with hand)
Invest less on multiple companies (Example: Sharing one dog’s food to multiple dogs and cats)
Invest huge in single company (Example: Giving five days food to a dog to survive for next five days)
Trading/timing in stock market (Example: Thinking the sun will rise late today)
Considering investing for fun or hobby (Example: Putting finger inside an acid bottle for just having fun)
Investing on companies have huge debt (Example: Begging to handover the huge rock to own shoulder from someone who already carrying that)
Investing on rumors (Example: Butchering and eating a nice goat by thinking the world going to end in the night)
Approaching stock market with greed (Example: Biting a hard stone by thinking it is a white chocolate)
Being panic over stock market volatility (Example: Leaving the thread of a kite and running away by seeing it is coming down from height)
Panic selling when stock market is falling (Example: Praying to god loudly after seeing an airplane but thinking it as a flying cross)
Investing with borrowed money or loan (Example: Trying to touch the running blade in a sawmill)
Not knowing the selling time (Example: Sleeping in the evening by thinking it is midnight)
Failing to diversify (Example: Pouring all juices to a single cup to drink one by one later)
Relying on historical data or returns (Example: Being ready to take a bath under rain in the evening because there was a rain last evening)
Investing on illiquid stocks (Example: Paying money for free rocks laying in the ground and bringing it to home thinking it is valuable asset)
Taking excessive risks (Example: Sitting on a tree branch and cutting the same)
Not focusing on expenses and tax (Example: Sitting on a glue by thinking it will not stick)
Trading too much and too often (Example: Trying to fill water in a net)
Not monitoring the investments (Example: Assuming barking dog seldom bite but forgot his brother standing beside and not barking)
Marrying stocks (Example: Trying to hug a cactus)
Holding a bad stock (Example: Giving milk to cobra)
Investing based on news (Example: Sharing a donkey and a horse in the same cart to take a smooth ride as per news)
Start investing late (Example: Trying to climb on big tree at the age of 80)
Investing after retirement (Example: Joining acrobatic class in the age of 80 to become a world champion)
Having too complicated portfolio (Example: Reading 10 books at a time)
Emotional buying and selling activities (Example: Offering own parachute to another person in a troubled airplane)
Not choosing a right broker (Example: Approaching a mechanical engineer to get medicine for sickness)
Experimenting with stock picking (Example: Showing the fingers to fire to check whether fire is hot or cold)

How to avoid these investment mistakes

Here are 5 important steps that help investors to avoid common investment mistakes.

Learn about investing

Learn the in and out of investing. Read best books like ‘Common Stocks and Uncommon Profits” and the biography of great investors such as Warren Buffett’s life and time “The Snowball: Warren Buffet and the Business of Life” and great investment strategies of John Templeton. Learn the strategies they have used to succeed with investing. Learn about the mistakes they have made and avoided during their time. Have better knowledge on all the investment assets, its risks, returns and suitability of the portfolio and goal.

Have and stick in a strategy

Success behind every great investors directly connected to their investment strategies. No one give anything to them but they have developed their investment strategies. They never failed to violate anything in that strategy and that gave them huge success. As an investor, one should have a solid investment strategy that covers all the angels on investing. For example, selection, timing, investment, diversification etc.

Make investment decisions yourself

Making investments are for us and for the future. Investor must decide where to invest, what to invest, how to invest and how much to invest. Advice is free in this world and anyone can freely give advise to others. Fools will give ear to that advice and later fall in pits. This is why Buffett told “Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway“. Undoubtedly, you can see fools in investing world than investors who have real wisdom. When start investing, remember, you are your own and only boss. To make yourself like that, learn and create perfect and fail proof investment strategy!

Work with best financial advisors

It is advisable to approach the right advisors who have lots of success in his career and have passion towards the job what he or she is doing. It is difficult to find the best investors but can be found upon doing homework. Never go for free advice and that will never work better. Here are some methods too check the suitability of an advisor.

Deal with analysts and news

Investors should have enough commonsense when dealing with analyst reports, news and rumors. Should not jump and act fast. Instead, do research to know the authenticity of news or report. This will help to conclude and take a suitable decision.