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8 Common Investing Mistakes Most Beginners Make

October 31, 2022 | Investment

How you invest your money will greatly impact your future wealth and well-being.

There are many different investing mistakes that people can make, but there are some that are more common than others. If you’re thinking about investing, it’s important to be aware of these mistakes to avoid them. Read on to learn more!

Common Investing Mistakes

1. Not Diversifying Your Portfolio

One of the most common investment mistakes beginners make is not diversifying their portfolio. You take on considerable risks when you invest in just one or two asset classes. If those asset classes perform poorly, your entire investment could be wiped out.

Diversifying your portfolio across different asset classes, such as shares, bonds, and property is important. This way, if one asset class performs poorly, the others may offset the losses. You can diversify further by investing in different assets within that asset class, for example, buying shares across multiple industries and across companies.

2. Not Understanding the Risks

Another common mistake is not understanding the risks involved with investing. Before you invest your money, you should have a good understanding of the risks involved.

For example, shares are generally considered to be riskier than bonds. This means that they have the potential to lose value, but they also have the potential to generate higher returns.

3. Not Having a Plan

Another mistake that people make is not having a plan. Before you invest your money, you should have a clear investment plan. This plan should include your investment goals, risk tolerance, and time horizon.

4. Chasing ‘Hot’ Shares

One mistake that many investors make is chasing hot stocks. This is when you invest in a stock that has been performing well recently or that you hear about at a backyard barbecue, in the hopes that it will continue to go up.

However, past performance is no guarantee of future results. Just because a share has done well doesn’t mean that it will continue to do well.

5. Not Monitoring Your Investments

Another mistake that many investors make is not monitoring their investments. Once you have invested your money, it’s important to keep an eye on your investments. This way, you can ensure they are performing as you expect or make adjustments where necessary over time.

6. Failing to Rebalance Your Portfolio

One of the most important things you can do for your portfolio is to rebalance it regularly. Rebalancing is when buy and sell some of your investments to keep your investment portfolio in line with your investment plan.

As time goes on and investment values change, you could end up being overweight or underweight in some asset classes which could leave you off course for your investment plan and put you at risk of not achieving your goals.

7. Fixating on the Past

It’s important to learn from your mistakes, but it’s also important to move on. Many investors make the mistake of fixating on their past mistakes and letting them affect their future investment decisions.

Instead of dwelling on your past mistakes, focus on the future and ensure that you don’t repeat the same mistakes.

8. Not Having an Exit Strategy

When you invest in an asset, it’s important to have an exit strategy. An exit strategy is a plan for when you will sell your investment. Many investors hold on to their investments for too long and end up losing money.

It’s important to plan for when you will sell to take your profits and move on to the next investment.

Avoid Investing Mistakes with Guidance from Coastal Advice Ballina Byron

There are several common investing mistakes that Australian investors make, which can be costly. These include investing without doing research, not diversifying your portfolio, and chasing after ‘hot’ shares. By being aware of these mistakes and taking steps to avoid them, investors can help to improve their chances of success.

If you are looking for an experienced financial adviser that offers investment advice in Byron Bay, Ballina and the Northern Rivers, you should speak to Coastal Advice Ballina Byron. With our guidance, we will help you achieve your financial goals and live your best life! Call us or book online to secure your complimentary first meeting with our advice team.

DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.

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