2 Investing Mistakes You’re Making Right Now

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You invest, or at least you want to, or you wouldn’t be reading this now.

But have you stopped to consider the investing mistakes you’re making?  You know, the investments you’ve forgotten about, or more to the point, the ones you should be forgetting about?

Your Investing Mistakes

Now that you’re investing in yourself.  How about fixing one or two of those investing mistakes you’re making.

What investing mistakes?  I’m glad you asked.

Investing Mistake #1: Expensive Toys

In today’s consumer culture, we’re bombarded with messages to buy buy buy!  But how often do you just stop, and make that conscious decision of if what you’re considering purchasing is something you actually need vs something you think you want?

Most importantly, do you make that choice between this toy, and the months or years sooner you would reach financial freedom if you invested that money instead?

Buy a fancy car, and you worry about someone dinging it in the parking lot.  Living here in Silicon Valley, I regularly see six-figure cars driving down the road.  A Bentley here, a Maserati there.  In fact, a co-worker has an Aventador he drives to work on sunny days. Beautiful cars, yes.  But it always makes me laugh to see them parked across multiple spaces in the parking lot trying to keep them safe.

Big wallets, little common sense.

You can rationalize your fancy, expensive car – my commute is so long, I need to protect my kids, I’m successful and deserve it, my professional image requires it.  But deep down inside, you know it’s a rationalization.

Buy a fancy house, you worry about fire, theft, flood, act of god.  Or just worry about losing your job, and the bank foreclosing on your 6/4 McMansion.

Instead, choose the calmer path.

Worry less about keeping up with the Jones’s and invest your time in what matters most.

While I’m no Buddhist, there is truth in their Second Noble Truth – suffering is caused by craving.  The sooner you can control your craving for the latest shiny toy, the sooner you can control your body, your mind, your self.

“Suffering is caused by craving.”

An easy first step to eliminating the toys?  Avoid the ads.

We cut the cable cord years ago now, and get more entertainment than we can ever watch.

And best of all?  No advertisements.

It’s always a shock when I visit relatives for the holidays and see how many ads are shown on TV these days.  It seems like some channels show more ads than they show entertainment, and I’m not even talking about the shopping channels or infomercials!

Investing Mistake #2: Stressful Investments

If you’re checking your investments every day, you’re too worried.  Stocks. Real estate, whatever.

Only invest money you can afford to lose, and investments you can afford to ignore.

Personally, I’m a big fan of dividend investing.  There’s always the chance of a downturn or other event causing a company to fail – whether it fails to increase its dividend, fails to pay its dividend, or just fails.  But when some of these companies have been paying a steadily increasing dividend for decades, that’s a chance I’m willing to take.

If fire-and-forget is more your style, there’s nothing wrong with a low fee index fund or ETF, like the Vanguard S&P 500 ETF (VOO).  Depending on your risk tolerance, age, financial state, etc. you can decide for yourself how much of your net worth should be in stocks vs bonds, domestic markets vs international, etc.  While simple index funds typically outperform the actively managed funds over the long term, just remember with all things investing, there are the black swans, just like there are the periods where you could lose your shirt if you were unlucky enough to pick the wrong entry and exit times.  Hopefully, by diversifying across the entire market via an index fund, you’ve reduced your overall risk.

Peer-to-peer lending is the most stressful investment I have at the moment.  However, in this regard I follow my own advice, and have only invested money I can afford to lose.  More importantly, I find P2P lending fascinating and enjoy checking my account performance every quarter rather than stressful or distracting.  Granted, there could come a day when it’s more stressful than it’s worth.  But if that day comes, I’ll close my account and move to something else.

What Matters Most

The most important investment you can make is in yourself.  Remember to take the time to discover what matters most to you, and make that the center of your investing strategy.

When your life and your investing are aligned with what matters most to you, you can never fail.  You might lose money.  But no one ever lay on their deathbed wishing they had spent more time managing their investments.

So take the time and answer that question for yourself.

What matters most to you?

Readers, what are your biggest investing mistakes so far?  Have you aligned your investing and your life with what matters most to you?


  1. For the most part I’ve been a conservative investor, which means you need to start at an early age so that time is on your side for retirement investments. My biggest risk taking years aligned with my peak earning years, and I was fortunate that I was able to participate in the boom of tech stocks. But I took the money and put it back into my conservative investments, probably too soon. I think your personality type dictates how much stress the investment risk means to you and these days my personality is all about “no stress”.
    Gary @ Super Saving Tips recently posted What Will a Fed Interest Rate Hike Mean to You?My Profile

    • Good points, Gary. After getting burned in dotcoms and 2008, I’m a little too cautious. I went all in in 2009 and rode the market high, but pulled out early and missed out on some of the gains of the past few years.

      The one nice thing about the unusual markets these days is that it keeps you on your toes wondering what is going to happen next. It’s certainly never boring!

  2. I was too focused on individual stocks when I got out of college thinking I was smarter than the market. I’m not. I wish I had picked passive index funds from the get go and not spent so much time trying to pick winners and get rid of all the worry and anxiousness that I had along the way. I sleep much better these days since I moved to a passive strategy 🙂
    MUSTARD SEED MONEY recently posted Are People Who Retire Early Selfish?My Profile

    • I hear you!

      Back in my impetuous youth I tried all sorts of active and mechanical investing strategies. Lost money. Lost sleep. Lost any inkling of delusion in my stock picking expertise.

      I’ve been sleeping better, at least up until my first son was born…

  3. Great stuff here, Jack. Ever since we started thinking of toys purchases in terms of hours worked our cravings have become smaller and smaller. We value debt freedom more. And we have no desire to spend a lot of time maintaining them. The simple life rocks!

    • The “hours worked” translation is a great way to look at the true cost of a purchase.

      Time is our most valuable resource, the only one you can’t get more of. Once you not just realize it, but truly internalize it, wasting your time by wasting your money hurts in your bones.

  4. I’ve made far too many mistakes. At the moment I’ve gotten myself into getting an expensive new toy and stressful investment in one – a house I’m building. With each day I realise I should have probably gone with something smaller and more modest, and maybe in a few years I might return to that. The upside is that the house is going to be worth much more than I pay for it.

    Another mistake was selling some shares. They’ve continued to go up and the only reason I sold was emotional. I should have known better.

    We live and learn.

    • Mistakes are what make us human. It sounds like you’ve learned from your mistakes, and that’s what matters most! After all, the only thing worse than making a mistake is failing to learn and making the same mistake again and again.

      But then again, sometimes it takes repetition for a lesson to sink in. Just ask my son still figuring out how to walk 🙂


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