Avoid these 6 common investment mistakes

When it comes to investment, knowledge is power. Avoiding the six common investment mistakes below will help you reach your investment objectives.

Published on 12 November 2025

3 min read

You have decided to invest - that’s great. It shows you are serious about building your future, growing your wealth, and making your money work as hard as you do. But even the most committed investors can stumble if they don’t know some key basics.

Mistake 1. Risking it all with one type of asset

Sticking to one type of investment is risky. If it doesn’t do well, your whole investment plan will take a hit. Spreading your money across different assets and products, such as equities, fixed income or mutual funds, reduces your overall risk and helps balance returns.

Mistake 2. Investing in the unknown

Jumping into investments you don’t fully understand often goes wrong. You might overestimate potential gains or ignore hidden risks. Instead, take time to learn the essentials. Explore how the investment product works, the risks involved, and whether it fits your risk appetite. Still unsure? Consider consulting a SEBI Registered Investment Adviser for guidance.

Mistake 3. Trying to time the market

There is no right time to jump into investing. No one can perfectly predict market highs and lows. But the longer your money is invested, the more it benefits from compounding. So, waiting too long will cost you.

That means it is best to start early – even with small amounts - and use tools like Systematic Investment Plans (SIPs) to invest regularly. The perfect time to get started is always now.

Mistake 4. Making impulsive decisions

Market swings can be daunting. Letting short-term feelings of fear or excitement drive decisions can lead to bad calls such as selling at a low price or buying into hype. Instead, think long-term and stick to a plan based on your own financial objectives and risk appetite.

Mistake 5. Overlooking investment costs

Expense ratios, management fees and transaction charges can quietly eat away returns over time. So don’t ignore them. Always compare the cost of different options before investing. Index funds, for example, typically have lower fees and can be a cost-effective choice, while direct mutual funds don’t have distributor commissions, so you keep more of your gains. Always read the fine print to understand exactly what you're paying for.

Mistake 6. Assuming free is best

If someone offers you free advice, ask yourself what is in it for them. Chances are, they’re earning commission - and you’ll end up paying for this through your investments, reducing your returns. Instead, choose a financial partner who is a fiduciary, someone obligated to act in your best interests. SEBI Registered Investment Advisers (RIA) charge transparent and upfront fees and don’t receive commissions. This ensures that your investment strategy is built around your goals and not theirs. In the long run, paying for personalised advice could save you far more than opting for ‘free’ guidance.

Bottom line: Learn before you leap

Investment mistakes aren’t just missteps - they are missed opportunities. By avoiding common pitfalls, you will protect your money and help it grow.

Successful investing isn’t about luck, guesswork or perfect timing; it’s about clarity, discipline, and making informed choices.

Take control today: your future self will thank you.

Disclaimer: This article is for educational purposes only.