8 Common Investing Mistakes and How to Avoid Them

You don’t need to be an expert to invest well, but it helps to avoid a few common traps.

1. Waiting for the “right time”

Nobody can reliably predict short-term market moves. Waiting on the sidelines often means missing gains. Investing a set amount on a schedule takes the guesswork out.

2. Selling when the market drops

Downturns are normal. Selling after a drop locks in losses and often means missing the recovery. If market swings keep you up at night, your mix may be too aggressive for you.

3. Paying high fees

A 1% annual fee doesn’t sound like much, but over 30 years it can cost a significant share of your potential returns. Compare expense ratios and advisory fees.

4. Putting too much in one company

Holding a large share of your money in one stock, including your employer’s, adds a lot of risk. Diversify across many companies.

5. Chasing hot trends

By the time an investment is all over social media, much of its run-up may already be over. Speculative bets should be a small part of your money, if any.

6. Ignoring your 401(k) match

Not contributing enough to get your full employer match is one of the most common and costly mistakes. See how 401(k) matches work.

7. Not rebalancing

Over time, your mix of stocks and bonds drifts. Rebalancing once a year keeps your risk where you want it. Target-date funds do this for you.

8. Investing money you’ll need soon

Money for a down payment next year or an emergency fund doesn’t belong in stocks. Keep short-term money in savings, CDs or T-bills.

The simplest plan: Get your 401(k) match, invest in low-cost diversified index funds, add a little each month and leave it alone.