Top 10 Investment Mistakes to Avoid in 2025
By Net Worth Advisory Group
In the 20+ years we’ve been working with clients from all walks of life, we’ve seen (and helped to correct) many investing mistakes people make, sometimes repeatedly. Investing well doesn’t have to be complicated or complex. In fact, having a disciplined focused approach has been shown to serve most investors well, given time and avoiding big mistakes or poor strategies.
Here are 10 of the most common mistakes we see that can detract from investment success.
1. Trying to Time the Market
Jumping in and out of the market based upon whether you think it will rise or fall doesn’t usually work out well. No one, not even self-appointed “experts” in the financial media, knows what the market will do the next day, the next week, month, or year. Acting on sentiment, even with part of your portfolio, often leads to disappointment and poor outcomes.
2. Cashing Out During Bear Markets
Panic-selling during a severe market decline could be one of the worst investing decisions you make. Once you sell, then you have another decision to make: when to get back in. More often than not, panic-sellers wait too long before the recovery is underway and miss a large portion of upturn before reinvesting.
3. Fretting and Worrying Over Volatility
Worrying about inevitable market volatility and allowing it to dictate your investment decisions can lead to poor results and lost opportunities. As legendary investor Warren Buffett has stated, “The future is never clear. You pay a high price in the stock market for a cheery consensus. Uncertainty actually is the friend of the buyer of long-term values.”
A combination of a well-considered investment plan and sticking with your discipline to that plan is often the most effective strategy.
4. Reacting to Recent Events
Making investment decisions in response to current events (whether geopolitical, economic, or based on a singular bit of company news or event) is rarely an effective method. There are so many variables that could determine whether an investment will produce a good return or not. Wall Street analysts spend countless hours trying to dissect the implications of one thing or another on investing success, and most often all that analysis is meaningless. Most of the daily news is just “white noise” and has little to nothing to do with how your investments will perform over time.
5. “Market Watching” and Obsessing Over Short-Term Action
In a similar vein to #4, many people constantly watch what the stock market indices are doing and check the value of their portfolio each day—or even several times a day! This is counter-productive to long-term success. Doing so just serves to amplify your emotional reactions, can overwhelm logic and sensible investment behavior, and can work against your financial objectives.
6. Adopting a Pessimistic Outlook
Prolonged market declines can be discouraging to investors and can influence whether to stay the course or contribute new money to your investment plan, resulting in missed opportunities. While future results are never guaranteed, having a positive, optimistic investment approach often produces good results over time, and balancing risk tolerance and investment goals is crucial for long-term success.
7. Chasing Returns
Ignoring the tenets of diversification and heavily investing or overweighting whatever has had the best performance can be a recipe for ruin. Often, the best performing asset class in one or two years ends up near the worst in subsequent years. This is why proper asset allocation and diversification are critical to a solid investment program.
8. Utilizing Day Trading and Other Speculative Strategies
Investing with a gambler’s attitude can wreak havoc on your wealth. Speculating on high-risk investments based on “hunches” or price patterns can be detrimental to your long-term objectives. Instead, embrace a diversified, asset allocation approach as a smart way to build your nest-egg.
9. Looking for the Home-Run Investment
Trying to get rich quick by heavily investing in the next “Amazon” or “Apple” invites peril. Millions of dollars have been lost by everyday investors betting on the next technology darling or wonder drug. Instead, focus on steady reliable portfolio strategies that accumulate value over time and practice patience.
10. Not Monitoring Investment Expenses and Taxes
Over time, high investment expenses (trading fees, commissions, internal investment costs, surrender charges) and taxes on capital gains can eat away at your portfolio value and slow your progress toward financial freedom. Understand what you’re paying in expenses and adopt tax-efficient investment strategies to keep more of your money.
Partner With a Trusted Advisor
We know the investment world can be complex and confusing. This is why we take a pragmatic values-based approach to assisting our clients with moving toward financial success.
Net Worth Advisory Group is here to help fulfill your dreams and highest aspirations. Are you looking for a financial planner dedicated to simplifying financial management and helping you pursue your ideal financial future? Call us at 801-566-6639 or schedule a complimentary, no-obligation consultation to see if we are a good fit to help you pursue your goals.
To learn more, visit our website.
About Net Worth Advisory Group
Founded in 2003, Net Worth Advisory Group is an independent, fee-only, CERTIFIED FINANCIAL PLANNER® and investment advisory firm located in Salt Lake City, Utah. We specialize in helping people transition from the workplace into retirement and ensuring that those who are already retired will not outlive their nest egg. Our top priority is to have clients experience a greater sense of ease with diligent, personalized wealth care and the implementation of customized financial plans and ongoing personalized asset management. We equip all clients with a comprehensive financial plan, meeting every six months to update as needed and review investment performance. Our team is passionate about providing comprehensive financial planning with the fee-only model, and we love feeling like we’re making a difference in our clients’ financial lives.
As a NAPFA-registered fee-only advisory firm, our recommendations are untainted by a hidden agenda to sell financial products paying large commissions. Unlike our competitors at brokerage firms, insurance companies, and banks, we are compensated solely by our clients, so we are financially motivated to provide objective advice that is always in our clients’ best interests. Anyone can call himself or herself a financial planner, but only an advisor with the CERTIFIED FINANCIAL PLANNER®, CFP® designation has met the education, examination, experience, and ethical requirements mandated by the CFP® board. According to the CFP Board, there are 97,000+ CFP® professionals in 2023, representing about 1 in 3 financial advisors in the U.S. Net Worth advisors are also members of NAPFA, which only has about 4,600 advisors, and are either CFP® professionals or CFP® professionals in training.
Net Worth Advisory Group’s mission is to significantly improve the lives of our clients by delivering exemplary financial planning and wealth management advice that enables them to live the lives they have imagined.