7 Hidden Investing Traps (how to avoid them)
Aug 22, 2026Read time - 4 minutes / Disclosure
Avoiding investing traps can:
- Save you time.
- Save you money.
- Help you be a smarter investor.
Unfortunately, there's many traps to avoid.
The Ultimate Fear
A huge part of investing is knowing:
- What to avoid.
- Why to avoid it.
- How to avoid it.
Many people are unaware of these traps.
Especially new investors.
And lord knows I've learned many of them the hard way.
"There are really just two rules of investing: Rule 1: Don't lose money. Rule 2: Don't forget rule number one."
– Warren Buffett
Becoming a millionaire while working my 9-5 job became a weird obsession in my 20s and 30s.
Not because I wanted to buy:
- Fancy cars.
- Fancy houses.
- Or go on fancy vacations.
These things are nice.
But my main motivation was:
- To not have to work a 9-5 until age 60.
- To quit fulltime work a few decades early.
- To be able to work just part-time for myself.
- To spend more time with friends and family.
Learning to invest became the solution.
And there were many investing traps along the way before leaving my fulltime banking job in 2020.
7 Investing Traps to Avoid
Here's a list of investing traps I've learned the hard way.
Hope they're useful.
Let's dive in.
1. The Herd
Not following the crowd can be tough.
Especially when you hear things like:
"NFTs are at an all time high."
"Dogecoin is at an all time high."
"Fart coin is at an all time high."
The fartcoin crash
Following the crowd is often a trap.
"Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years." — Warren Buffett
2. The Bets
Being overly confident can be costly.
During my investing journey, there's been some great gains and some lousy losses.
5-figure and 6-figure losses to be exact.
I've found big mistakes often come from having too much confidence in 1 thing.
"I knew that no matter how confident I was in making any single bet, that I could still be wrong." — Ray Dalio
3. The Media
News outlets drive emotion.
And emotion can lead to action.
(like selling investments)
For example:
But what's interesting.
Stocks went up 20% from May 2025 through the summer of 2025.
Making investment decisions based on the news can be a trap.
"Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves." — Peter Lynch
4. The Timing
Buying low and selling high is hard.
As a new investor, I thought a lot about trying to time the market.
But eventually realized trying to predict the future in the short term is nearly impossible.
Investing long term is easier (and less stressful).
"The big money is not in the buying and the selling...it's in the waiting." — Charlie Munger
5. The Doomers
Fear is contagious.
For decades certain people have been talking about a "big" stock market crash.
Some say it's an 80% or 90% crash.
People believing this idea sometimes sell their investments to wait for "the big crash".
And some waited for decades as the stock market continued to grow.
Stock market since 1989
"Despite some severe interruptions, our country's economic progress has been breathtaking. Our unwavering conclusion: Never bet against America." — Warren Buffett
6. The Gurus
Confidence is contagious.
Someone's always claiming to know which stock will double, or triple or go up 1,000%.
People regularly open their wallets to pay for this "advice".
But the harsh reality.
Many hot stock tips lead to lost money.
"One should only invest in what they know. Do not listen to hot stock tips." — Jim Rogers
7. The Luck
With investing, it's easy to confuse luck with skill.
Especially in the beginning.
It's something I've also experienced.
For example.
Getting a loan to buy my 1st tiny condo that went up in value $100k in 2 years.
Seattle, Washington
When selling that small condo, I felt like a genius.
And got another loan to buy a house.
But over the next 3 years the value of that house dropped $160k.
It was painful.
It was also then that I realized the $100k condo profit in 2 years was mostly luck.
(buying it and selling it right before the financial crisis)
Eventually the value of the house went back up over the next few years.
"People think making money is about luck. It's not. It's about becoming the kind of person that makes money." — Naval Ravikant
The bottom line
Most people want investing to be exciting.
Including me in the beginning.
But the truth is.
It's pretty dang boring.
The 2 main things that took my finances from $80,000 in debt in my 20s to $1M of investments in my 30s was:
1.) Investing in an S&P500 stock fund like VOO which includes the 500 largest companies in America.
2.) Getting loans to buy real estate.
And hanging on through the ups and the downs of life.
A good reminder:
Y’all forgot the turtle won the race. Stay Consistent. Stay Focused.
— 🥷🏿 (@_bobbyw) October 29, 2024
Everyone's searching for the secret to $100k or $1M of investments this year.
Hell, I searched for it too in the beginning.
But eventually realized building 6 or 7-figures worth of investments over a longer period of time is a better bet.
And the years sure do fly by.
That's all for today.
See you next Saturday.
