When I first dipped my toes into the world of investing back in 2021, I thought I had everything figured out.
I believed that if I just invested consistently, I would naturally build wealth over time. While there is some truth to that, I quickly learned that the journey to financial freedom isn’t a straight line — especially when you make classic beginner mistakes.
In this post, I’ll share the common investment mistakes I made during my early investing years, the hard lessons that came with them, and how you can avoid falling into the same traps.
If you’re serious about growing your wealth, learning what not to do can be just as valuable as learning what to do.
Let’s dive in.
1. Blindly Following Trends
One of the most common investment mistakes beginners make — and one I definitely made — is chasing trends without fully understanding what they’re investing in.
When I first started, I invested in anything that seemed popular at the time. From tech stocks and meme stocks to crypto altcoins and P2P lending platforms, I wanted a piece of everything that was “hot” on the internet or social media. I was following the crowd without doing proper research or understanding the fundamentals of what I was buying.
Why It’s a Mistake:
- You risk putting your hard-earned money into volatile assets without understanding the risks.
- It’s easy to panic and sell at a loss when the hype dies down.
- You lose confidence because you don’t have strong conviction in your investments.
What I Learned:
Before investing in anything, I now ask myself:
- Do I understand this asset or business?
- Do I believe in its long-term potential?
- Would I be comfortable holding it even if prices dropped 50%?
Today, I focus mainly on what I have strong conviction in: the S&P500 (via VOO) and Bitcoin. I stick to what I understand and trust — no more chasing hype.
2. Investing Without a Clear Purpose
Another common investment mistake I made early on was not having a clear purpose or goal behind my investments.
When someone asked me back then, “What are you investing for?” I honestly didn’t know. Retirement? Buying a house? Financial freedom? I hadn’t thought that far. I was simply investing because everyone said it was the right thing to do.
Why It’s a Mistake:
- Without a goal, it’s easy to feel lost or directionless.
- You might invest in assets that don’t suit your real financial needs or timeline.
- It becomes much harder to stay disciplined during market ups and downs.
What I Learned:
Before putting any money into investments now, I always ask myself:
- What am I saving and investing for?
- What is my investment timeline (short-term, medium-term, long-term)?
- How much risk can I realistically tolerate?
Having a purpose anchors your strategy and helps you stay the course, especially when the market gets rocky.
3. Overcomplicating My Portfolio
When I first started investing, my portfolio was a confusing mess.
I had money scattered across multiple apps, platforms, asset types, and strategies. From robo-advisors to individual stocks, to a bunch of random altcoins — I was all over the place.
This is another common investment mistake — overcomplicating things in the name of diversification.
Why It’s a Mistake:
- It’s exhausting to track everything.
- You dilute your returns by spreading yourself too thin.
- You end up feeling overwhelmed instead of empowered.
What I Learned:
Simplicity is powerful.
By 2023, I decided to consolidate my investments. I sold off all my Malaysian stocks on Bursa and streamlined my portfolio into just three key assets I truly believed in.
Now, I can easily track my investments, adjust my strategy if needed, and sleep better at night knowing I’m not managing 15 different micro-bets at once.
4. Letting Emotions Drive My Investment Decisions
No matter how “logical” you think you are, investing can trigger strong emotions — especially fear and FOMO (fear of missing out).
I made emotional decisions multiple times in my early journey, often buying or selling based on panic, excitement, or anxiety.
It’s one of the most common investment mistakes that even experienced investors still struggle with.
Why It’s a Mistake:
- Emotions cause you to buy high and sell low.
- They push you into investments you don’t fully understand.
- They prevent you from sticking to a long-term strategy.
What I Learned:
Managing emotions is part of investing.
Now, I regularly ask myself before making any financial move: “Am I acting out of fear or greed?”
If the answer is yes, I take a step back, re-evaluate my plan, and remind myself why I invested in the first place.
5. Confusing High Income with Financial Stability
When I started earning a higher salary, I assumed I was automatically “good with money.”
Unfortunately, I also started spending more — on gadgets, courses, personal training, and convenience services like GrabFood.
This is a sneaky common investment mistake: thinking that earning more equals being financially secure.
Why It’s a Mistake:
- Lifestyle inflation can outpace your income growth.
- You might have nothing to show for your higher salary years down the line.
- It delays true wealth-building.
What I Learned:
Wealth isn’t measured by how much you earn — it’s measured by how much you keep and grow.
I now track my savings rate carefully and try to keep my lifestyle simple, even when my income increases.
The goal is financial freedom, not fancier expenses.
6. Giving Up When Investments Were Down
One of the most painful experiences early on was seeing my portfolio drop into the negatives during the 2022 market downturn.
I felt like a failure.
I was tempted to stop investing altogether — a classic common investment mistake called “loss aversion.”
Why It’s a Mistake:
- Markets are cyclical; downturns are normal.
- Selling in fear locks in your losses permanently.
- Giving up too early means missing the eventual recovery.
What I Learned:
Staying invested through bad times is critical.
I kept investing small amounts consistently even when my portfolio was in the red. By early 2024, I was rewarded: my portfolio showed a +45.98% return on the original amount invested.
Consistency beats perfect timing every time.
Avoiding Common Investment Mistakes
If you’re new to investing — or even if you’ve been at it for a few years — remember: making mistakes is normal. What matters most is learning from them and adjusting your approach.
Here’s a quick recap:
- Don’t chase trends. Invest in what you understand.
- Define your goals. Know your why.
- Keep it simple. Focus on a manageable portfolio.
- Master your emotions. Stick to your plan.
- Grow your savings rate, not just your income.
- Stay consistent, even when it’s tough.
By avoiding these common investment mistakes, you’ll be able to build a strong, resilient investment strategy that stands the test of time.
Investing isn’t about being perfect. It’s about being patient, disciplined, and self-aware.
If you found this post helpful, consider subscribing to my newsletter where I dive even deeper into personal finance, investing basics, and the honest lessons I’m still learning every step of the way.
Until next time, keep investing wisely!
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