Five common mistakes of new investors

1. Not Diversifying Properly

Many people invest too much in individual stocks and favorite-brand companies. When you have money in an individual stock, you’re relying 100% on that company’s performance. When you buy a mutual fund, you get access to hundreds of companies in one fund, so the risk of one corporation doing poorly is less for your overall portfolio.

2. Investing Too Aggressively or Too Conservatively

When you adopt an overly-conservative investing approach early on, you lose out on growth potential. You’ll have to contribute a much larger sum to catch up with your peers who decided to invest more aggressively.

If you’re too aggressive close to retirement, you could lose a huge chunk of your portfolio and not have enough time to recoup your losses.

3. Not having an investment plan

With a plan in place, you won’t be tempted to flit from one shiny investing idea to another. When you have a plan, you can invest with purpose and boost your chances of being successful.

4. Ignoring investing costs

Many people invest too much in individual stocks and favorite-brand companies. When you have money in an individual stock, you’Many people remain oblivious to the cost of their investments and it’s probably because they never receive invoices. If you invest in mutual funds, the fees are automatically taken out of your accounts.

Many investors don’t understand is that a fund that charges, say, 1 percent versus 2 percent is a big deal. The difference in what a mutual fund charges you can mean the difference between retiring comfortably or spending each month during your retirement worrying about how you’re going to pay your bills.re relying 100% on that company’s performance. When you buy a mutual fund, you get access to hundreds of companies in one fund, so the risk of one corporation doing poorly is less for your overall portfolio.

5. Not Actually Investing Your Money

Unfortunately, this mistake is more common than you might think. We’ve seen plenty of people invest in an PEA or PEL for years before realizing that their money is just sitting there not earning interest or dividends. That’s like burying your money in the backyard and hoping it multiplies.