Investing Mistakes to Avoid (So You Don’t Lose Money Like I Did!)

If you read my latest email, you know I recently discovered that I had $1,000 sitting in my settlement fund completely uninvested for almost a year. And while that was a frustrating mistake to catch, it’s far from the only common investing misstep.

If you’re just starting your investing journey (or even if you’ve been investing for a while), here are some of the biggest mistakes to avoid so you can keep your money growing efficiently.

1️⃣ Forgetting to Invest Your Money

The mistake: Depositing money into your brokerage or retirement account but never actually purchasing investments.

How to avoid it: Always double-check that your cash is actually invested in an index fund, ETF, or another asset that aligns with your strategy. In your brokerage account, look for a “settlement fund” or “core position”—if you see a balance there, it’s time to invest!

2️⃣ Stock Picking Instead of Investing in Index Funds

The mistake: Trying to pick individual stocks instead of investing in broad, diversified index funds.

Why it’s a problem: Stock picking is risky and time-consuming, and most individual investors underperform the market. An index fund like VTI or VOO spreads your risk across hundreds of companies, reducing volatility and increasing your chances of long-term success.

How to avoid it: Stick with a long-term, buy-and-hold index fund strategy and resist the urge to chase “hot stocks.”

3️⃣ Trying to Time the Market

The mistake: Waiting for the “perfect” time to invest or pulling your money out during market downturns.

Why it’s a problem: Studies show that time in the market beats timing the market. Missing just a few of the best-performing days in the stock market can significantly reduce your returns over time.

How to avoid it: Set up automatic investments (like dollar-cost averaging) and stay invested for the long haul, no matter what the market is doing.

4️⃣ Ignoring Expense Ratios

The mistake: Choosing investments with high fees (expense ratios) without realizing how much they eat into your returns.

Why it’s a problem: A fund with a 1% expense ratio can cost you hundreds of thousands of dollars over your lifetime compared to a low-cost index fund with an expense ratio of 0.03% or lower.

How to avoid it: Always check the expense ratio before investing. Look for low-cost index funds like VTI, VOO, or FZROX, which have minimal fees.

5️⃣ Not Contributing Enough to Get Your 401(k) Match

The mistake: Not contributing enough to your employer-sponsored retirement plan to receive the full company match.

Why it’s a problem: A company match is free money that can significantly boost your retirement savings.

How to avoid it: If your employer offers a 401(k) match, contribute at least enough to get 100% of the match before investing elsewhere.

6️⃣ Investing Without Understanding Your Retirement Number

The mistake: Investing randomly without knowing how much you actually need for retirement.

Why it’s a problem: Without a clear target, you might under-save or invest too conservatively, putting your future at risk.

How to avoid it: Use the 25x rule to calculate your retirement number:
🔹 Estimate your annual spending in retirement
🔹 Multiply that number by 25 to get your retirement goal
🔹 Adjust for a 3-4% withdrawal rate depending on your risk tolerance

👉 Read my full breakdown of how to calculate your retirement number here!

7️⃣ Checking Your Portfolio Too Often

The mistake: Obsessively checking your investment performance and making emotional decisions.

Why it’s a problem: The market goes up and down in the short term. If you panic and sell during a downturn, you lock in losses instead of riding out the recovery.

How to avoid it: Set it and forget it! Stick to a long-term investing plan, check your portfolio once a quarter or once a year, and stay the course.

The Bottom Line

Making investing mistakes is normal—even I still make them! But the key is to catch them early and learn from them so your money can grow as efficiently as possible.

✅ Avoiding these common mistakes will help you build long-term wealth without unnecessary setbacks.

If you want a simple, stress-free way to start investing for retirement, check out my investing basics course, Your Path to Wealth!