As soon as most people start to explore the financial world, they quickly realize that it is more complicated than they initially anticipated. Effective health care teams have several important characteristics including anything. There are so many terms and concepts to get around before you can even start investing. But don’t worry, we’re here to help.

For most people the first mistake they make is investing right away. That’s right, there are so many factors to consider before you even make your first investment.

1. Max out your retirement accounts 

The first and most important thing you should do is to max out your retirement accounts. That includes 401Ks, 403Bs, IRAs and the like.

You want to make sure any money you put in these accounts gets the maximum tax advantage possible. That means not just putting in the money but also taking that extra step of contributing enough each year to get the company match if there is one. Maxing out your retirement accounts should be a top priority if you are starting from zero as it will help save thousands in taxes every year and also get a head start on saving for retirement

2. Invest only after careful evaluation

One thing we hear from people all the time is they wish they had invested more when they were younger. That may be true, but the mistake is that they didn’t invest a dime until they were older.

You should never invest without knowing what you are doing. Nothing is worse than losing money on your investments because you didn’t know what you were doing and then saying “Man I wish I had started investing sooner.” You should always research any investment you might make before investing money. Make sure to do your homework before engaging in any investment activity, it will save you from making costly mistakes.

3. Don’t over diversify

Another mistake that people make is over diversifying their portfolio. A lot of times people hear about the importance of diversification, which is very important. However, for most people over diversifying actually hurts their portfolio more than it helps because they are trading off on the potential return in exchange for a bit of risk reduction.

4. Stocks are not always the best investment

You’ve probably heard this one before. It’s true that stocks are good, very good. However, they are not always the best investment. That can be confusing because you may think that if you buy a handful of stocks it would be better than investing in a single stock or mutual fund. A lot of people think that stocks have always gone up and never gone down, but we all know that’s not true. Stocks are not a guaranteed investment like bonds or CDs and if you invest in stocks without knowing what you’re doing then you can lose a lot of money quickly.

5. Investing for income

When you first start investing you might be tempted to look for income investments. That is investing in things like bonds and CDs that offer a steady stream of income. But unless you have a very specific plan for your money, these types of investments are probably not the best options.

6. Not keeping fees low

One of the biggest mistakes people make when they invest is not paying attention to what they’re paying in fees and expenses. We spend thousands on insurance every year, so saving a few dollars on a mutual fund or ETF shouldn’t matter right? Wrong! When it comes to investing a few dollars can mean thousands over time, so don’t overlook cost and fees when choosing where to invest.

7. Buying stocks that don’t make sense

Buying individual stocks has always been a popular investment strategy. The problem is that it’s not always the best strategy. Any time you buy an individual stock there is always a chance you could lose money, so only invest if you have done the proper research and have a very specific plan in mind. Another common mistake people make is buying into stocks just because they have a great name or they’re in the business they want to invest in. Buying into brand names can backfire, because one way to get a company’s name out there is by advertising and even though you may not like what they do you still want them to succeed.

8. Not researching expenses

We all know that expense ratios are important which is why we always look for the lowest ones when investing. The problem with this is how do you know how much expenses really are unless you research?

What most people don’t realize, however, is that expenses are not just from owning the investment but from holding it as well.


In the end, you should always do what makes sense to you. That is the most important lesson here, and this list is just a guide to help your journey. If something works for you, then that’s great, just don’t ignore other options because of these few mistakes. There are a lot of mistakes that people make when they start investing in the stock market and at first it can be very confusing. But as you can see there is a lot to learn about, so don’t despair, we are here to help!


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