Top 12 investment mistakes that people make (according to experts)

Top 12 investment mistakes that people make (according to experts)

An expert round-up on what you shouldn't be doing with your investments

Olga Rabo

Mar 4, 2021



min read

Let’s be honest: the word ‘investing’ sounds frightening for many people out there.

In fact, according to this report, 61% of adults say they find investing to be ‘scary or intimidating’, with data also suggesting that millennials feel more intimidated by the stock market in comparison to GenXers and Boomers.

How to get over the fear?

One word: knowledge.

Those who manage to get over their financial insecurities (which are often mental or emotional, rather than financial) and simply start learning are those who manage to crack the investing code at the end. Investing, after all, isn’t rocket science. There are things you should do (like having an emergency fund first, doing your investment research, etc.) and things you simply shouldn’t.

So, what is the one thing that people get wrong about investing?

Previously, we’ve already covered 5 most common investment mistakesoften made by beginners. This time, we asked experts around — and they named not one, but 12 investing mistakes that hold many people back.

Buckle up, and read on!

Top 12 investment mistakes that people make (according to experts)

#1 Investment mistake: Chasing the trends

The worst mistake is not to inform yourself before making decisions.

Primarily, this means two things: First, don't make excuses why you can't or shouldn't invest, but inform yourself about your possibilities and especially about the necessity of investing. Many people don't know that as little as €25 a month is already enough to start investing!

And second, never invest blindly or chase trends without studying the subject. If you feel unsure about investing, get help!

What people need to understand is that you cannot rely on others: you need to take care of your finances yourself. Otherwise, your state pension can simply not be sufficient at the end of the day and you might become dependent on others. So don't wait or block yourself with excuses and inform yourself before you make decisions. And never forget: investing is a marathon, not a sprint!

— Simin Heuser, Finance Expert @ HerMoney

#2 Investment mistake: Trying to “outbeat the market”  

Many people fail to understand that investing doesn’t have to be complicated. Instead of going after time-consuming stock-picking and/or market-timing strategies, people should rely on a broad diversification with 3-4 ETFs – and that’s it. In the long run, most active traders fail to beat the market – so why not just follow it? It’s definitely more relaxing.

— Carlos Link-Arad, Co-founder @ Beyond Saving

#3 Investment mistake: Thinking there’s just “one right way” to invest

In my opinion, there is only one thing that I consider wrong about investing. Namely: that there is a “right” and “wrong” way to do it.

Every person has individual ideas, goals and objectives. I therefore believe that there is no right or wrong investment or investment strategy — only a suitable or inappropriate one for you

My advice is therefore to stay away from “someone else’s” financial recommendations and rather listen to yourself to find out what makes sense and is appropriate for you individually.

Aspects such as your own risk tolerance, previous investing experience, goals, wishes, future expectations and even emotional background can play a decisive role. An investment strategy is just as individual as the person themselves.

Ricardo Tunnissen, Financial Advisor

#4 Investment mistake: Acting out of emotions

One of the worst mistakes people make is not investing at all, because they believe investing doesn’t concern them. Yet, if people have already managed to get their money into work, the most important step has already been taken.

What is then probably the next biggest investment mistake is that people often approach their investments not rationally, but emotionally — thus often committing some very avoidable faux pas that cost returns and also money. Such mistakes and losses tend to put off many investors, but they’re easily avoidable! So stick to your plan and don’t let emotions or panic take over!

— Isabell Baruth, Finance Expert @ Isi Finance

#5 Investment mistake: Believing you don’t belong to the investment world

“The stock market is only for rich people.” — I’ve heard this phrase so often from my community and friends! Followed by the following doubts: “Why should invest? I don’t have enough money!” Or: “What can my meagre €50 investment bring to the table?”

I say: everyone can and should invest these days! You don't have to look at stock exchange prices every day and actively follow the world events or buy and sell stocks as soon as prices fall and rise… There are ways and means in the long-term to participate in the investment game with low risk with as little as €25.

Above all, young people should do this and take charge of their own financial future — simply because most of us won’t be able to live on the state pension we’re all entitled to later on, at the level where used to.

A special advice to women: don’t rely on your partner for money issues, leaving it up to him. This can always backfire as you’re risking being left out and being not in control of your finances and your life. It is, after all, the best feeling to be financially independent! So off to the stock market, ladies! 🙌

— Inga Winkelmann, Finance Expert @ Casherella

#6 Investment mistake: Believing that investing doesn’t have a footprint

One of the most common investment misconceptions is a belief that consumption and lifestyle choices have a footprint, but investing and how we use our money doesn’t.

In actuality, all of our money, including the money we save and invest, has a footprint.

When we buy things, many of us already think about the footprint implied, use calculators and even compensate. Our savings and investments, however, have a much bigger footprint one might think.

For example, €10.000 invested into a MSCI All Country World Index Fund actually causes twice the amount of carbon footprint (1.8t CO2e, based on17kg CO2e on every €100 invested) compared to said footprint reduced by turning vegan (which saves 0.8t CO2e per year).

And the scariest thing is, with all our euros, dollars or any other currency, if we keep our money in a bank, it has a footprint you cannot control. So you better take control of your money — and the footprint of your investments — today rather than tomorrow.

— Matti Rönkkö, Founder @ Cooler Future

#7 Investment mistake: Rushing in (or not starting at all)

Procrastinating for too long — or starting too quickly — is one of the top investment mistakes people make. There are often those who spend months informing themselves — and those who simply don’t start at all. This wastes precious, valuable time when money could already be put to use and be working for you.

Then there are people who know very little about investing — but are very eager to start ASAP. This is where beginner mistakes can often happen, which can, also often, be rather costly. If you want to start investing, you need a solid knowledge base to understand how the stock market works, how share prices work, etc. Once you have the knowledge base, investing is very rewarding — and can be a lot of fun!

— Margarethe Honisch, Finance Expert @ Fortunalista

#8 Investment mistake: Relying on ESG criteria too much

Many people think that investing in ESG funds is the most impactful thing you can do with your money, but even funds that score well on ESG criteria may still be supporting companies that are not in line with your values.

Investors should do their research into the companies within these funds and consider opportunities that provide more transparency like crowdinvesting, for example. Not only do crowdinvestment platforms provide much more information on projects and companies, but you can also see the direct impact of your investments.

— Martin Baart, Founder @ Ecoligo

#9 Investment mistake: Treating your securities account like an ATM

Since being active in the investment space from 2015 onwards, the most recurring pattern I have seen amongst people was to confuse their securities accounts with a cash machine. You should ideally only invest the money that you will not need in the short term. Why?

Because that way you avoid being too greedy in wanting to make too quick too much money (p.s. this rarely ends up well) and you don’t get tempted by taking your money out.

Your investments are your future financial freedom (e.g. to purchase real estate, pension, education), so it’s important to stay invested in the long run through highs and lows, to make the most out of capital markets.

— Raphael Steil, Co-founder @ GetQuin

#10 Investment mistake: Believing that investing will take *all* your time

One big thing that people get wrong about investing is a popular belief that it’s extremely time-consuming. Don’t get me wrong: active investing can consume multiple hours a day — but only if that’s part of your investment strategy (i.e. when you choose to trade rather than invest). But if you’re pursuing a long-term strategy, the best thing you can do is “set and forget” and not touch your investments at all. After you’ve done your research and you know what you’re doing, investing can only take a few minutes a week. You don’t need much time everyone, with any schedule, can make time for investing.

— Denise Haverkamp, Co-founder @ finance, baby!

#11 Investment mistake: Lacking patience

The biggest investment mistake? Lack of patience. The patience required for investing is a vital part of financial discipline and shows how well you can check your emotional state, greed, and manage money to achieve your goals.

— Karolina Decker, Founder @ FinMarie

#12 Investment mistake: Thinking you need to be an absolute pro

Even people with average salaries can retire millionaires — and they don't necessarily need to be investment pros. All you have to do is pick a handful of global ETFs, save regularly, and be patient. No expert knowledge required. Start with €300 per month at 25, and raise it to €500 per month from 40 onwards, and you will easily hit €1.2m at retirement. This works because ETFs contain a small piece of hundreds of the most profitable companies in the world. Historically, these have grown at an average of 8% per year, and there is no indication that this will change anytime soon. If anything, markets continue to push technology forward each year.

— Sana Al-Badri, Co-founder @ Sagefund


Knowing what not to do is oftentimes just as powerful as knowing what to do. We hope that these 12 investment mistakes, explained by experts, will help you get the confidence you need to take control of your finances and, finally, start investing.

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