5 Boring Mistakes Almost Every Investor Makes

I bought my first stock over 45 years ago. Since then, I’ve lived through the crash of 1987 (Black Monday), the dot-com bubble, the Great Recession, and post-pandemic inflation.

Market cycles change, but one thing never changes: human nature.

In my four decades of watching people try to build wealth, I have noticed that the biggest threat to your portfolio is rarely the Federal Reserve, the President, or the price of oil. It’s the person staring at you in the mirror.

We all struggle to make poor financial decisions. We run from the pain (selling when the market falls) and chase the fun (buying when the market rises).

If you want to retire rich, you should stop acting like a human and start acting like an investor. Here are five things you should avoid.

1. Trying to time the market

This is a classic ego trap. You make sure you can get out before crashing and get back in before re-buckling. Let me be clear: You can’t. Even experts don’t know.

If you are trying to time the market, you have to be doubly right. You should sell high and buy low. If you miss just a few days, you destroy your returns.

According to data from JP Morgan, if you remained fully invested in the S&P 500 from 2005 to 2024, you earned an annual return of nearly 10%. But if you tried to be good and missed the best 10 days in that 20-year period, your return drops to more than 6%.

Think about that. Shortages of two weeks of work over two decades have cut your benefits almost in half. Big market jumps often happen right after big declines. If you’re confused about the stock market and waiting for “the dust to settle,” you’re already lost.

2. Paying high fees because you are not paying attention

In all other areas of life, you get what you pay for. A Ferrari costs more than a Ford because it is faster and is thought to be better made. You get something for your money. In investing, the opposite is often true. You can pay more for the same, or worse, performance.

This is simple: The more you pay in fees, the less you save.

A fee of 1% or 2% sounds small. That’s not the case. It’s a big hole in your wealth bucket.

The SEC breaks down the statistics nicely. Let’s say you invest $100,000 over 20 years at a 4% annual return. If you pay a fee of 0.25%, your portfolio grows to about $208,000. If you pay a 1% down payment, it only grows to $179,000.

That small percentage difference cost you about $30,000. Before buying a mutual fund or hiring an advisor, look at the cost estimate. If you pay more than 0.50% of the average fund, you will probably get ripped off.

3. Thinking you can pick winning stocks

I believe in buying individual stocks. The reason is simple: I’ve made a ton of money over the years doing it.

I have owned stock in Apple, Microsoft, Amazon, Nvidia, Google and other big winners for many years; in Apple’s case, 25 years. Yes, I’ve also had some losers along the way, but I’ve definitely beaten the gains I would have made in a broadly based S&P Index fund or ETF.

But here’s the thing: I spent 10 years as an investment advisor and for decades spent a few hours every weekday reading about this stuff. Every weekday I watch a few CNBC shows for tips and information.

Sound like you? Otherwise, don’t buy individual stocks.

The data shows how statistically unlikely you are to beat the market over time by picking each stock. Consider this: over a 15-year period, about 90% of active fund managers fail to beat the S&P 500. And the managers of these actively managed funds are professional investors, with institutional research and all the bells and whistles at their fingertips.

If they can’t beat the index, what makes you think you can?

Unless you are willing to invest a lot of time in research, stop trying to find the needle in the haystack and just buy the haystack.

As I put it in the golden rules of being a millionaire, a low-cost S&P 500 index fund will outperform most stock pickers in a lifetime.

4. Letting your emotions drive the bus

When the market tanks, your brain screams “Sell!” to stop the pain. When your neighbor brags about making a killing with crypto, your brain screams “Buy!” to avoid missing out.

This emotional whiplash is expensive. Research firm Dalbar publishes an annual report called “Quantitative Analysis of Investor Behavior” (QAIB), and the results are always depressing.

In 2024, the S&P 500 returned 25.02%. But the average equity fund investor? They won only 16.54%.

That’s a gap of nearly 8.5 percentage points. Why? Because investors panicked, sold at the wrong times, or chased trends that were already gaining momentum. The market has done its job. Investors did not.

Here’s what I’ve learned over the years. If you’re up at night staring at the ceiling because you’re worried about your stocks, you’ve invested too much money in stocks. That will cause you to make mistakes.

5. Focusing on the rear view mirror

There is a psychological bias called “recency bias.” It means that we give more weight to what happened recently than what happened in the past.

When tech stocks go up last year, we throw all our money into tech. When bonds crash, we sell all our bonds. We chase past performance, thinking it will last forever. It’s rare.

Winners are rolling. The hot sector of 2025 could be the dog of 2026. If you keep chasing what just worked, you buy high and sell low—the exact opposite of how you build real wealth.

Stick to a different plan. Rebalance when things go wrong. And for heaven’s sake, stop looking at your account balance every day.