Even experienced investors can fall into traps, but for UK beginners, knowing what to avoid can make all the difference. Here are some of the most common investing mistakes and how to steer clear of them:
1. Neglecting Tax Efficiency
Ignoring ISAs or SIPPs can mean paying unnecessary taxes. Always maximise tax wrappers before investing through general accounts.
2. Chasing Performance
Buying “hot” funds or stocks based on past performance often leads to poor results. Markets are cyclical—past returns don’t guarantee future gains.
3. Lack of Diversification
Overexposure to a single stock or sector increases risk. A globally diversified portfolio smooths returns and protects against market shocks.
4. Trying to Time the Market
Many investors try to buy low and sell high, but even professionals struggle with market timing. Regular investing beats emotional guesswork.
5. Ignoring Fees
High fees can erode returns over time. Compare fund charges and platform costs before committing. Look for low-cost index funds and transparent platforms.
Avoiding these mistakes helps create a resilient, long-term portfolio aligned with your financial goals.