Please ensure Javascript is enabled for purposes of website accessibility

My 2 Biggest Investing Mistakes -- and 3 Biggest Successes

By Diane Mtetwa - Apr 29, 2021 at 5:05AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Both your losses and wins can help you get where you need to be.

Investing helps everyday people build wealth. And it can help us meet our goals better than just a savings account alone.

But investing is also a journey filled with lessons learned along the way. And while sharing your best moves can be fun, talking about the things you wish you hadn't done isn't always enjoyable. But we all have wins and losses -- here are a few of mine. 

Woman sitting at a computer throwing her hands in the air and celebrating.

Image Source: Getty Images


1. Trying to time the market

Although I knew better, I was not exempt from making certain mistakes, like trying to time the market. Fear and greed are common emotions that even a trained professional can fall victim to. And my loss aversion took over my rational thought from time to time. If I had a lump sum of money or was just rebalancing investments that were skewed, I had a hard time doing so when the markets were trading at highs. Instead, I held on to the money and waited for a drop in stock prices. 

Because I didn't have a crystal ball, rather than timing it perfectly, I ended up missing out on crucial positive stock market days. The more of these days that I missed, the more it impacted my overall rate of return. In hindsight, I wish that I'd remembered that it doesn't matter from day to day what the stock market does if the money has a long-term purpose. 

2. Not reviewing enough and making adjustments

Because I wasn't trading a lot of stocks but instead holding funds, I made the mistake of not reviewing them enough. While these more-passive investments didn't require as much attention, this didn't mean that I could completely set them and forget them. I did still have some actively managed mutual funds that favored a particular style and some ETFs that were invested in a certain sector. And as those funds grew, the initial allocations that I owned were thrown out of whack.

In a year like 2008, when stocks performed poorly and bonds rose to the top of the performance charts, my bond allocations grew more and my stock allocations shrunk. As a result, when 2009 started, my accounts were more conservative than they initially were and didn't recover as well as they could've. My holdings didn't need daily review, but I should've made sure that I was doing some sort of portfolio review at least once a year so that these changes were proactively made. 


1. Starting early

Although I couldn't always contribute as much as I wanted, I'm happy that I started investing early. At the beginning of my career, I didn't make much money, and it seemed as if there were so many other expenses that were more urgent. Delaying investing until I was a higher wage earner definitely crossed my mind so that I could prioritize these other things.

But deciding that I would invest as soon as I could was one of the best decisions I ever made. Beginning early made it so that when I could save more, I wasn't starting with no money. And the small amounts of money that I could save still benefited from positive stock market returns and compounding. It also helped me develop good savings habits. 

2. Creating an investing budget

Because I was already making room for saving, even if it wasn't much, it was a part of my budget. As I started making more money, I could easily increase the amount that I saved the same way I did for increases in spending on my essential and discretionary expenses. At first, I focused on my 401(k) and maxing out my contributions. When I accomplished that and still had additional money, I opened up a non-retirement account and directed my extra funds there. 

Investing in my 401(k) introduced me to the concept of dollar-cost averaging. And I carried this concept with me to my brokerage account. Each month, my contributions went into the funds I chose. And some months, shares were purchased at higher prices, while for others, they were purchased at lower prices. But most importantly, there was rarely money left sitting in cash uninvested. And there was no guesswork on my part about when I should buy an investment. 

3. Investing passively with the majority of my money but leaving some for trading

Because I was busy at my job, I didn't have time for researching all of the stocks and bonds that I should buy. I had the skill, but when I tried, the task would end up incomplete and my money would go uninvested for longer than I wanted. So at some point, I just started passively investing in mutual funds, index funds, and ETFs. 

Originally, I planned on investing this way until I could research individual holdings, but then I learned something: Index funds and ETFs are incredibly effective. When you look out five to 10 years or more, the vast majority of money managers fail to match the returns of the S&P 500.

They spend all day and have people with expert-level knowledge looking for great investing opportunities. And they still don't outperform major indexes most times. This made me feel more comfortable keeping my passive investment strategy for the long term. If and when I had a great stock pick, I made a budget for that.

I have had successes as an investor, and those wins have made reaching my goals more attainable. And while those moments felt great, they weren't my most defining moments. Investing can be intimidating because you don't want to make mistakes, but learning from those errors has been more impactful than my wins because they've helped me become a better investor. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.