7 Investing Mistakes (and how to avoid them)

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Investing can:

- Grow your assets.

- Boost your net worth.

- Help you quit 9-5 life early.

Unfortunately, investing mistakes can do the opposite.

Hard Lessons

Making mistakes as a beginner investor is:

- Stressful.

- Regretful.

- Expensive.

Most people jump with joy when buying their first stock.

But a drop in the stock market can quickly leave you wondering—

Did I make the right decision?

The truth is—

Investing is confusing at first.

And investing mistakes are painful lessons.

Especially when stocks jump around like crazy which can lead to panic selling.

^{2025 Stock Market}

Fortunately, the stock market drop earlier this year bounced back quickly.

So how do you avoid big mistakes?

I can tell you one thing.

I've made many.

After watching others make the same mistakes (and learning from my own the hard way).

I decided to create a cheat sheet for beginner investors called:

The 7 Sins of Investing

It's common traps beginner investors face.

Hope it's helpful.

Let's dive in:

1. The Missing Plan

Hope isn't a strategy.

Long ago I bought my first individual stock because I liked the company.

Over time I realized, that was a terrible (and costly) idea.

I eventually learned before buying an individual stock, I needed to:

1. Research the company.

2. Research the industry.

3. Have an entry plan.

4. Have an exit plan.

"People think making money is about luck. It's not. It's about becoming the kind of person that makes money." — Naval Ravikant

2. The Hot Tips

Most hot tips aren't hot tips.

When I started investing in individual stocks.

I subscribed to many different "stock research" services.

These are companies you pay an annual fee to that make stock recommendations.

A few of the recommendations did ok, but most of the stocks flopped.

"One should only invest in what they know. Do not listen to hot stock tips." — Jim Rogers.

3. The Big Bets

Big bets can be big losses.

Betting big on 1 company is painful if that company doesn't succeed.

I was quick to make bigger bets on stock as a beginner investor.

But over time learned it's best to not put all my eggs in one basket.

"There's no escaping risk. Understand and accept that all investments carry some level of risk." — John Bogle

4. The Unrealistic Expectations

Too much optimism can be dangerous.

When buying my first few individual stocks.

I was extremely optimistic.

What I didn't expect was:

- A 10% drop.

- A 5% gain.

- A 15% drop.

- A 10% gain.

Individual stocks can jump around like a wild boar in the short term.

"Have realistic expectations. Understand that market returns vary and aim for achievable (long-term) goals." — John Bogle

5. The Emotional Decisions

Emotional decisions can be costly.

Stocks can pop +20%.

And stocks can plunge -20%.

These situations can play havoc on your emotions.

Which can drive you to do things you later regret (I've been there).

Investing legend Warren Buffett's advice is harsh but noteworthy:

"Until you can manage your emotions, don't expect to manage money (well)." — Warren Buffett

6. The Market Timing

Buying low and selling high in the short term is hard.

I thought about timing the market a lot as a new investor.

But I eventually realized that trying to predict the future in the near term and getting it right repeatedly is difficult.

Playing the long game is easier.

"We haven't the faintest idea what the stock market is gonna do when it opens on Monday — we never have. We haven't ever timed anything." — Warren Buffett

7. The Burning Impatience

Obsessively checking stocks can be costly.

When I started buying individual stocks, I found myself checking them repeatedly.

- In the morning.

- During lunchtime.

- Right before bedtime.

I eventually realized I was more likely to do things I later regretted when doing this (like emotional buying or selling).

"The big money is not in the buying and the selling...it's in the waiting." — Charlie Munger

The Bottom Line

Investing mistakes happen.

They can cost hundreds or thousands of dollars.

After making many of these mistakes myself as a beginner.

I came up with 3 best practices to help me avoid them:

1. Invest most of my money in an S&P500 fund like VOO (not individual stocks).

2. Research an individual stock fully before buying it (instead of buying it without much info and hoping for the best).

3. Make my investing decisions when the stock market is closed (like on weekends) so I avoid making last-minute decisions I may later regret.

Knowing the 7 sins of investing has helped me become a better investor. I hope they help you too.

Keep building 💰

See you next week.