Let’s break down some of the biggest investing mistakes beginners make—and how you can avoid them.

The biggest investing mistakes beginners make (and how to avoid them)

Start Investing
Saxo Be Invested

Saxo Group

Investing is one of the most powerful tools for building wealth and achieving financial freedom, yet many beginners make avoidable mistakes that can set them back. Whether it’s making impulsive decisions, failing to diversify, or not doing enough research, these missteps can slow progress toward financial goals—or worse, lead to unnecessary losses.

The good news? By understanding common mistakes and taking a thoughtful, strategic approach, you can avoid costly errors and set yourself up for long-term success.

Let’s break down some of the biggest investing mistakes beginners make—and how you can avoid them.

Mistake #1: Not diversifying your portfolio

One of the most common beginner mistakes is putting all your money into just a few investments. Many new investors hear about a “hot stock” from a friend or read about a company that’s supposedly about to take off, and they put all their money into that one opportunity. While it’s tempting to chase big wins, this strategy is extremely risky.

Why diversification matters

Diversification—spreading your investments across different asset classes—is a fundamental principle of investing. It helps reduce risk because different types of investments don’t all move in the same direction at the same time. If one stock or sector is struggling, other parts of your portfolio can help balance out the losses.

How to diversify your investments

Instead of putting all your money into a single stock, consider investing in a mix of:
  • Stocks. Large-cap, mid-cap, and small-cap companies across different industries.
  • Bonds. Government and corporate bonds provide stability and predictable returns.
  • ETFs and mutual funds. These allow for broad market exposure with less risk than individual stocks.
  • Alternative assets. Depending on your risk tolerance, you might explore real estate, REITs, or even commodities.

By diversifying, you reduce the risk of a single investment wiping out your portfolio. Think of it as not putting all your eggs in one basket.

Mistake #2: Selling too quickly in a market downturn

Markets go up and down—that’s just the nature of investing. However, one of the biggest mistakes beginners make is panicking and selling when the market drops.

Why this happens

A common scenario: You invest in a stock or fund, and within a few months, the price drops significantly. Fear sets in, and you decide to sell to "cut your losses." Later, you watch the same investment recover and rise even higher than before, leaving you regretting your decision.

Selling in a panic often locks in losses that might have been temporary. While it’s normal to feel uneasy when markets are volatile, it’s important to remember that investing is a long-term game.

How to avoid panic selling

Instead of reacting to short-term market movements:
  • Have a long-term strategy. Remind yourself why you invested in the first place.
  • Avoid checking your portfolio too often. Constant monitoring can lead to unnecessary stress and rash decisions.
  • Stay invested through downturns. Historically, the market has always recovered over time.

If you’ve done your research and invested wisely, short-term fluctuations shouldn’t shake your confidence.

Mistake #3: Ignoring your risk tolerance

Every investor has a different level of comfort with risk, and understanding yours is essential to making good investment decisions.

Factors that influence risk tolerance

Your risk tolerance is influenced by:
  • Your personality. Some people enjoy risk, while others prefer stability.
  • Your financial situation. A stable income and emergency savings allow for greater risk-taking.
  • Your time horizon. Younger investors can take on more risk than someone nearing retirement.

Finding the right balance

Ignoring risk tolerance can lead to two major problems:

  1. Investing too aggressively – If you take on too much risk, you might panic and sell at the worst possible time.
  2. Investing too conservatively – If you avoid risk entirely, your investments may not grow enough to meet long-term financial goals.
To avoid this, assess your risk tolerance and choose investments that match it.
  • Conservative investors might focus on bonds and dividend stocks.
  • Aggressive investors might lean toward high-growth stocks and alternative investments.
  • Balanced investors often hold a mix of stocks, bonds, and ETFs.

Understanding your own risk tolerance helps you invest with confidence while avoiding unnecessary stress.

Mistake #4: Failing to prioritize investing

Many people think about investing but don’t make it a consistent habit. They might invest a little here and there, but they don’t prioritize it as a regular financial commitment.

Why consistency matters

The key to successful investing is consistency. If you only invest sporadically, you miss out on:
  • Dollar-cost averaging – Investing a fixed amount regularly helps smooth out market fluctuations.
  • The power of compounding – The longer your money is invested, the greater your potential returns.

How to make investing a habit

  • Treat investing like a monthly expense – Just like rent or bills, make it a non-negotiable part of your budget.
  • Automate your investments – Set up automatic transfers to your investment account each month.
  • Start with what you can afford – Even small, regular contributions can grow significantly over time.

By making investing a habit, you ensure steady progress toward your financial goals.

Mistake #5: Not doing enough research

Investing isn’t just about picking random stocks and hoping for the best. Many beginners make the mistake of investing based on hype, recommendations from friends, or whatever is trending in financial news.

The importance of research

Blindly following advice without understanding why you’re investing in something can lead to poor decisions. Before investing in any stock, bond, or fund, take the time to research:
  • Company fundamentals. Revenue, profits, growth potential, and competitive advantage.
  • Market trends. Broader economic conditions that might impact your investment.
  • Historical performance. While past performance isn’t a guarantee of future results, it can provide insight into how an investment has reacted to different market conditions.

Good research doesn’t mean you need to spend hours analysing charts—but even basic knowledge can make a big difference in long-term success.

Mistake #6: Trying to time the market

Many beginners think they can outsmart the market by buying at the lowest point and selling at the highest. While it’s tempting to wait for the "perfect" moment to invest, the truth is that timing the market is nearly impossible—even for experts.

A better approach

Instead of trying to predict market movements:
  • Invest regularly. Stick to a schedule rather than waiting for the “right” time.
  • Stay invested. Long-term growth is more important than short-term movements.
  • Think in years, not months. The market will always have ups and downs, but historically, it has trended upward over time.

Patience and discipline often outperform short-term strategies based on market timing.

Final thoughts

Investing is one of the best ways to build wealth, but making the right choices from the beginning can save you from costly mistakes.

By avoiding common pitfalls like a lack of diversification, panic selling, and failing to prioritize investing, you can set yourself up for long-term success.

The most important thing? Start now. Even if you’re starting small, the habits you build today will shape your financial future. Stay consistent, do your research, and remember—investing is a marathon, not a sprint.

Quarterly Outlook

01 /

  • Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally

    Quarterly Outlook

    Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Q3 Macro Outlook: Less chaos, and hopefully a bit more clarity

    Quarterly Outlook

    Q3 Macro Outlook: Less chaos, and hopefully a bit more clarity

    John J. Hardy

    Global Head of Macro Strategy

    After the chaos of Q2, the quarter ahead should get a bit more clarity on how Trump 2.0 is impacting...
  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

Disclaimer

The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please refer to our full disclaimer and notification on non-independent investment research for more details.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.