The Five Investing Mistakes That Cost Me

I wish someone had written this for me fifteen years ago.

Back then, I thought investing was about being clever. Finding the right stock at the right time. Spotting what others missed. Outsmarting the market. I spent hours reading forums, watching CNBC, and building spreadsheets that made me feel like I knew what I was doing.

I didn’t.

What I actually did was make the same handful of mistakes that almost every beginner makes — mistakes that quietly compounded against me while I thought I was building wealth. By the time I figured out what I was doing wrong, I had already surrendered years of potential growth to my own bad instincts.

The frustrating part? None of these mistakes are complicated. They’re not hidden traps that require an MBA to understand. They’re the same errors that show up again and again, generation after generation, because they feel right in the moment — even when they’re actively destroying value.

Here’s what took me far too long to learn.

Mistake #1: Buying Things I Couldn’t Explain

Early on, like so many young, bright eyed investors I was looking for a lottery ticket.

A friend mentioned something was “about to pop.” A headline said a company was “revolutionizing” its industry. A chart showed a line going up and to the right. That was enough for me.

At one point, I owned shares in a biotech company I couldn’t have described to you with a gun to my head. Something about gene therapy? Cancer treatment? I genuinely didn’t know. But the ticker symbol looked good in my portfolio, and it had already doubled, so clearly I was a genius.

When it dropped 60% on a failed trial, I had no framework for deciding whether to hold or sell. I didn’t know if this was a temporary setback or a death sentence. I ended up panic-selling near the bottom-as so often happens- only to watch it partially recover. 

And worse, I learned absolutely nothing from the experience because I still didn’t understand what I had owned in the first place.

Warren Buffett has that famous line about investing without the homework is like playing poker without looking at your cards. He’s right, and I wish I had learned this lesson the first time. 

It took a while with more than one example, but now I am an avid researcher — hence Evervests.com.

This doesn’t mean you need to have be a financial analyst for every investment. But you should have some understanding — reviewed analyst’s reports and certainly have some idea about the core business and its prospects.

If you can’t answer simple questions, you’re not investing. You’re speculating. And speculation has its place — I’m not here to tell you never to take a flyer on something — but you should at least know that’s what you’re doing.

I’ve become a much better investor since stopped feeling my way through and actually looked under the hood of my investments.

If you can’t explain an investment to someone else in two minutes, you probably shouldn’t own it.

Mistake #2: Letting My Emotions Run the Show

The market is a machine designed to exploit human psychology.

I don’t mean that conspiratorially. I just mean that prices move in ways that trigger our worst impulses at exactly the wrong moments. When stocks are rising, you feel the pull of missing out. When they’re falling, you feel the terror of losing everything. Both feelings are real, both are valid, and both will absolutely destroy your returns if you act on them.

I learned this the hard way during my first real market drawdown. Watching my portfolio drop 20% felt like a personal attack. Every red number on the screen was evidence that I had made terrible decisions. The urge to sell — to stop the bleeding, to do something — was overwhelming.

So, I sold. Near the bottom, naturally.

And then I sat in cash, paralyzed, while the market recovered. By the time I felt “safe” enough to buy back in, I had locked in losses and missed most of the rebound. I had managed to sell low and buy high — the exact opposite of what every piece of investing advice tells you to do.

DALBAR, a research firm that studies investor behavior, publishes an annual report comparing the returns of actual investors to the returns of the market itself. The numbers are consistently brutal. In 2024, the average equity investor earned 16.54% — sounds decent, until you realize the S&P 500 returned over 25% that same year. That’s not a small gap. That’s 848 basis points of underperformance, nearly 8.5% left on the table, in a single year.

Benjamin Graham wrote that “the investor’s worst enemy is likely to be himself.” 

I think it’s the most important sentence ever written about money.

The solution isn’t to stop feeling emotions — that’s not how humans work. The solution is to build systems that prevent you from acting on them. Automate your investments. Set a regular contribution schedule and stick to it regardless of what the market is doing. 

Write down your investment thesis and tape it to your monitor so you remember why you bought something when you’re tempted to bail.

I can say that even the seasoned professionals are not immune, but they’ve become conditioned to manage through it. 

As a portfolio manager, I am better at this now too. Not because I don’t feel it in my very soul, but because I have taken measures to try to examine the pressures within my investment thesis.

I would like to say that I made these changes after my first panic sell, but — no. Eventually… This is one of the most challenging.

Mistake #3: Concentrating Instead of Diversifying

Early success is the most dangerous thing that can happen to a new investor.

When one of my first stock picks went up 80%, I felt invincible. Clearly, I had figured something out. So, I did the natural thing: I put more money into it. And more. Before long, this single position represented over 40% of my entire portfolio.

You can probably guess what happened next.

The stock dropped 45% over the following year on a series of earnings disappointments. Because I was so concentrated, that single position dragged my entire portfolio down with it. All the other investments I had — the ones that were quietly performing fine — couldn’t offset the damage from my largest holding.

Diversification is boring. It doesn’t make for exciting stories at parties. Nobody brags about their broadly-diversified portfolio of low-cost index funds. But diversification is one of the only free lunches in investing — a genuine way to reduce risk without necessarily reducing expected returns.

The math on this is old and well-established. Harry Markowitz won a Nobel Prize for demonstrating that combining assets with different risk profiles can reduce overall portfolio volatility while maintaining similar expected returns. Research suggests that owning 20–30 stocks from different industries eliminates most company-specific risk. Beyond that, you’re mostly exposed to market risk — the risk that the overall market declines — which is unavoidable anyway.

For most people, the simplest path to diversification is broad market ETFs. A single total-market index fund gives you exposure to thousands of companies across every sector. Adding international equities, bonds, or other asset classes spreads your risk even further. 

You don’t have to become a portfolio construction expert. You just have to resist the urge to bet everything on your best idea.

I still hold individual positions I believe in. But I’ve learned to size them appropriately — painfully. No single stock represents more than 5–10% of my portfolio anymore. 

In the odd chance that I’m wrong, I don’t want a catastrophe.

Mistake #4: Trying to Time the Market

At some point, every beginner convinces themselves they’ve figured out when to buy and when to sell.

Maybe the market feels “too expensive.” Maybe a recession seems imminent. Maybe some technical indicator you read about suggests a correction is coming. The temptation to wait for a better entry point is almost irresistible.

I spent months in cash once, convinced that valuations were unsustainable and a crash was imminent. The crash didn’t come and the market kept climbing. By the time I finally capitulated and invested, I had missed a 15% run-up — gains I never recovered because I was trying to be clever instead of just being consistent.

Here’s the problem with market timing: even when you’re directionally right, you’re usually wrong about the timing. And the timing is everything. Markets don’t move in straight lines. They lurch around unpredictably, with massive gains and losses clustered in random bursts.

JPMorgan publishes a study on this that I think about constantly. Over a 20-year period ending in recent years, if you stayed fully invested in the S&P 500, you captured the full market return. But if you missed just the 10 best trading days during that entire period, your return was cut roughly in half. Miss the 20 best days, and you gave up over 70% of your gains. Miss the 30 best days, and your returns approached zero.

Think about that. Twenty years of investing, and your entire outcome hinges on whether you were in the market during about two weeks’ worth of trading days scattered randomly across two decades.

It gets worse. Seven of the 10 best trading days in the market occurred within two weeks of the 10 worst trading days. The biggest up days and the biggest down days cluster together. Which means if you’re trying to avoid the crashes, you’re almost certainly going to miss the recoveries that immediately follow them.

The alternative is dollar-cost averaging — investing a consistent amount on a regular schedule regardless of what the market is doing. It’s not glamorous. It won’t make you feel like a trading genius. But it removes the impossible burden of prediction and lets compounding do the work over time.

John Bogle, the founder of Vanguard, spent decades trying to convince people that the only way to win the market-timing game is not to play. I wish I had listened to him sooner.

Mistake #5: Ignoring the Quiet Drain of Fees

Fees don’t announce themselves. They don’t show up as a line item on your statement saying “money you lost to expenses.” They just quietly compound against you, year after year, until decades later you realize how much they’ve cost.

For a long time, I didn’t think about fees at all. A 1% annual expense ratio seemed negligible. What’s one percent? It’s barely anything.

Except over 30 years, that “barely anything” can consume 20–30% of your wealth.

Here’s the math that should terrify every long-term investor. If you invest $100,000 and earn an average of 7% annually for 30 years, you’d end up with roughly $761,000 with no fees. Add a 1% annual fee, and that number drops to around $574,000. A 2% fee brings you down to roughly $432,000.

Same starting amount. Same time horizon. Same market returns. But the difference in ending wealth is staggering — hundreds of thousands of dollars transferred from your retirement to someone else’s revenue line.

The SEC has published similar analysis showing that a 1% fee over 20 years can reduce your portfolio value by 18% compared to a no-fee alternative. This is substantial.

Investment fees come in various forms: expense ratios on mutual funds and ETFs, management fees charged by advisors, trading commissions, load fees, and various other charges that get buried in fine print. Some of these are worth paying. 

A good financial advisor who keeps you from panicking during downturns might earn their fee in behavioral coaching. But the reality is that they don’t actually manage your funds — they generally put your funds in an investment list sent from their corporate analysis department and don’t look your portfolio again until you call.

For those looking to self-manage, the proliferation of low-cost index funds has made this easier than ever. You can now buy broad market exposure for expense ratios under 0.1% — essentially free compared to what actively managed funds charge. 

And the evidence suggests that most active managers don’t outperform their benchmarks anyway, which means you’re often paying higher fees for worse results.

For me, as a professional fund manager, I handle the investments myself, but when investing for others — like my children — the low-cost index funds are my pick. (Think SPY and QQQ).

What Actually Works

None of what I’ve described requires exceptional intelligence. It doesn’t require market insight or technical analysis skills or the ability to read financial statements. It just requires discipline — which, unfortunately, is the one thing nobody can teach you.

Some of the most successful follow this clearly. They invest in things they understand, diversify appropriately in low-cost assets and keep their emotions in check even through volatility. 

These habits aren’t flashy but they compound over decades into something remarkable: genuine, sustainable wealth that doesn’t depend on luck or timing.

I made every mistake in this article most multiple times. 

The losses I took for some of these were big… But the worst part was the compounding I surrendered and unfortunately can’t be recovered.

Remember, the best time to start investing was years ago. The second-best time is today. 

Avoid these 5 mistakes and you’ll you will be a successful investor.

Images Source: Except as directly noted, all images were created by EverVests.com via AI

Disclaimer: This content is for informational and educational purposes only and should not be considered financial, investment, or trading advice. The views expressed are based on publicly available information and personal opinion at the time of writing. Markets and conditions may change. Always perform your own research, verify data independently, and consult with a licensed financial advisor or investment professional before making investment decisions. The author may hold positions in the securities or assets discussed.