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Extractive summaries and key takeaways from the articles carefully curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Since 2017 | Week 407 | June 26 – July 4, 2025 | Archive

8 Expensive Investing Mistakes And How To Avoid Them
By Catherine Brock | Forbes | Jun 28, 2025
3 key takeaways from the article
- A recent report from financial services consultant DALBAR concluded that the average equity investor earned a 16.54% return in 2024. That may sound like a win, but the S&P 500 grew 25.02% in the same period. According to DALBAR, investors continued to under-perform due to their own behavior.
- Eight potentially expensive investing mistakes and how to avoid them: A) Not Investing – If you want to grow your net worth, stock investing is one of the simplest ways to do it instead of depositing it in a bank. B) Timing The Market – which you can’t predict so invest consistently every month, whether the market is strong or weak. C) Following The Crowd – If you feel the need to take action in a down market, increase your holdings in high-quality stocks when their prices are down. D) Going All In – Spread your wealth across at least 20 individual stocks plus some Treasury securities if you can. E) Paying High Fees – Dive into your brokerage account and funds to list the fees you’re currently paying. Then look for lower-fee alternatives for the account itself or your investments. F) Skipping The Research – Spend time educating yourself. Use it to research securities or investing strategies. G) Getting Emotional – Document what you’re trying to accomplish and how you will do it. The next time you feel like making a rash decision, go to your documentation and follow the methodology you defined in calmer times. And H) Investing What You Can’t Afford To Lose – Build a cash emergency fund before you start investing. Use that fund for unexpected expenses, so you won’t have to reach into your portfolio.
(Copyright lies with the publisher)
Topics: Investment Decision, Investing in Stock Exchange
Click to read the extractive summary of the articleA recent report from financial services consultant DALBAR concluded that the average equity investor earned a 16.54% return in 2024. That may sound like a win, but the S&P 500 grew 25.02% in the same period. The S&P 500 is widely viewed as a benchmark for the overall stock market—which means the average investor under-performed the market by over 8.4 percentage points.
The lag is surprising, given that investors can buy an S&P 500 ETF to keep pace with the market before fees. The DALBAR analysis said “investors continued to under-perform due to their own behavior,” citing withdrawals from equity funds just before market surges.
If you have $10,000 invested, an 840-basis-point miss costs you $840. Repeat the same mistakes a few years in a row and your net worth is thousands below where it could be. Let’s sidestep that outcome by learning about eight potentially expensive investing mistakes and how to avoid them.
- Not Investing. Cash is important to have on hand. You need it to cover unexpected expenses or income changes. Unfortunately, bank deposits don’t offer the same wealth opportunities as stocks. If you want to grow your net worth, stock investing is one of the simplest ways to do it. Open a low-cost brokerage account and invest monthly in an S&P 500 ETF. Your monthly budget can be small to start, but plan on increasing it as you get more comfortable.
- Timing The Market. Timing the market is an investing strategy that attempts to predict stock price trends and profit from them. Imagine knowing ahead of time that stocks would fall dramatically on Monday and then surge back on Tuesday. You’d invest on Monday when prices are low and sell on Tuesday for a quick profit. The problem is that making these predictions accurately is difficult. Even professional investors have spotty records in this area. Invest consistently every month, whether the market is strong or weak. And the next time stock prices fall, challenge yourself to wait it out. Hold your portfolio the same and see what happens on the other side.
- Following The Crowd. When investors are optimistic, stock prices rise. When investors are discouraged, stock prices fall. Getting caught up in these sentiments encourages you to buy high and sell low. You can’t make a profit that way. This is why famous, billionaire investor Warren Buffett once advised investors to “be fearful when others are greedy and greedy only when others are fearful.” This contrarian approach makes it easier to buy low and sell high, which is what you want. Don’t buy or sell because everyone else is doing it. If you feel the need to take action in a down market, increase your holdings in high-quality stocks when their prices are down. You’ll be well-positioned for gains when the market recovers.
- Going All In. Going all in refers to spending your entire investing budget on one stock or one industry. This strategy can expose you to extreme volatility and high loss potential. It can also prompt you to make other investing mistakes, such as timing the market, following the crowd and emotional decision-making. Diversification is the solution. Spread your wealth across at least 20 individual stocks plus some Treasury securities if you can. Or, invest in ETFs with well-diversified portfolios.
- Paying High Fees. Account fees, fund fees and trading fees pull money away from your investments and lower your returns. You can’t avoid all investing fees, but you can make sure you’re not paying more than you need to. Dive into your brokerage account and funds to list the fees you’re currently paying. Then look for lower-fee alternatives for the account itself or your investments.
- Skipping The Research. Making investing decisions based on limited information can be dangerous, particularly if you’re picking stocks. Fund-based investing strategies are less research-intensive, but you still should understand what you’re buying and how you can expect it to perform. Spend time educating yourself. You could allocate a short, weekly time slot on your calendar for this. Use it to research securities or investing strategies. Ask questions and find answers. The more time you put in, the better investor you’ll be.
- Getting Emotional. Emotions can convince you to sell when the market is down, even though logic says stock prices will eventually recover. Emotions can also urge you to buy tech stocks at crazy-high valuations, even though logic says there’s a point at which their prices become unsustainably high. If you don’t have a long-term strategy, make one. Document what you’re trying to accomplish and how you will do it. Include your methods for making trade decisions, and the criteria that make a security buy-worthy or sell-worthy. The next time you feel like making a rash decision, go to your documentation and follow the methodology you defined in calmer times.
- Investing What You Can’t Afford To Lose. Inevitably, your investments will lose value. Panic can result if the loss pinches your finances. At best, panic can push you into emotionally driven decisions like selling securities to avoid deeper losses. At worst, panic can encourage you to chase gains to recoup lost capital. That can lead to bigger losses and more panic. Build a cash emergency fund before you start investing. Use that fund for unexpected expenses, so you won’t have to reach into your portfolio. Also, only invest money you won’t need for at least five years.

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