Most Common Investment Mistakes And How To Avoid Them

Investing is one of those things that people tend to treat like a delicate process—primarily because it should be. Not being careful with your money is a good way to make sure that you end up having money problems later on.

The funny thing about investing is that just about everyone thinks they're an expert, even though very few offer any proof to that matter. Most people, whether they're aware of it or not, are committing at least one or two of the most common investment mistakes out there.

Don't believe it? We're willing to bet that your bottom line will do a lot better if you avoid these major traps.

Without a doubt, the most common investment mistakes others make tends to be related to the decision to invest at all. Most Millennials avoid investing in the stock market, for example, because they fear it's too complicated or too expensive for them to do so.

Investing doesn't require a lot of money or a lot of knowledge to do these days. Apps like Stash, Acorns, and Motif let total novices invest their money without having to spend too much cash to do so.

Not investing means that your money loses value as the economy grows, and that's not a good sign if you want to retire. The easiest way to avoid this trap is to use an investment app like Acorns or Motif to make small investments over time.

Even if it's not much, a little of something is better than nothing.

Limit orders are one of the most useful tools in investing. Limit Selling allows you to automatically limit how long you hold stocks before you cut your losses, and set the benchmark on how much you're willing to accept for a sale of a stock you own. On a similar note, limit buying will limit how much you're willing to spend.

Limit orders maximize profits, act as safeguards, and also limit losses. They're great things that keep an eye on the market for you. They are awesome like that.

One of the most common investment mistakes newbies make is not knowing how to work these kinds of orders. Apps like Robinhood allow newbies to learn the ropes without too much of a hassle. If you want to avoid making mistakes in Robinhood and elsewhere, you'll use this order type.

Have you ever kept a close eye on stocks in hopes that you'll see stocks surge, only to see them take a tumble? If you ask financial experts, keeping too close an eye on stocks is one of the most common investment mistakes people make.

Doing this isn't a good way to feel good about your decisions, and can make you prone to panic selling. A better idea would be to keep your stocks for the long term and ignore short term fluctuations.

If you really are panicking, use an app like ClosingBell to hear what the pros would say about your portfolio—and then make your move to sell.

A little bit of research goes a long way. Many of the best stock trades ever made were done because investors like Warren Buffett took a very close look at how stocks were performing and were able to deduce that something was awry before everyone else did.

Buying stocks willy-nilly is a lot more like setting off fireworks in your home; it's a really bad idea that will cost you money. An app like the one from Bloomberg can help you learn more about the stocks you want to buy.

Say it with me: you should never try to time the market! The market cannot be timed unless you have a ridiculous amount of experience and tools—and even then, it's shaky. Don't try to maximize profits this way.

What makes this aggravating is that, despite all the warnings from financial advisors, it remains one of the most common investment mistakes out there.

This app featuring the Wisdom of Warren Buffett will explain to you why timing the market doesn't work, and why doing so often ends up with major losses on your end.

Remember when you were young and your mom warned you not to put all your eggs in one basket? The same can be said about stocks! Stock portfolios need to have a wide variety of stocks in them in order to reduce the chance of major losses.

Though this isn't one of the most common investment mistakes around more experienced traders, almost every newbie makes this error. A good way to avoid getting hurt by this mistake is to invest in ETFs, such as the ones featured on Stash.

Don't get me wrong. Trendy could be good. However, trendy doesn't always mean that it has staying power or profitability. If anything, trendy often means that it'll be a "flash in the pan" business.

One of the reasons that people say that Millennials don't know much about investing is because those that do invest tend to invest in trendy businesses rather than ones that pay dividends or ones that have shown themselves to have solid management.

Leave the bling for your clothes, not your portfolio. Or, let an app like Acorns do the stock picking for you.

With investing, time is your biggest asset. This allows you to take advantage of compound interest over the course of decades. The sooner you invest in the stock market, the better off your bank account will be.

That's why one of the most common financial mistakes people make in their 20s is to invest in booze rather than stocks. Even trying a simple app like Clink can allow you to invest sooner rather than later.

A lot of people who want to avoid making the most common investment mistakes will pour in money they don't have to invest in a bunch of things. It's a great, enthusiastic attitude to have—but that doesn't mean that it's a wise choice.

If you would have a hard time making ends meet without the money you invested, you shouldn't invest that cash. It's better to put food on the table than it is to risk it all and lose it.

A better way to make sure you don't commit this financial sin would be to use a budgeting software kit like Mint. It'll help you plan your spending wisely.

Perhaps the most common investment mistakes of all are the ones that involve people who forget that their lifestyles, skills, and overall wellbeing matter. In fact, they may even matter more than your portfolio at times.

Got crushing debt? Pay it down and get rid of the harassing calls. Need to get a degree or a certificate? Go to school or take a Udemy class. Need to lose weight? Invest in a dieting course.

Not all investments are in the stock market. Sometimes, learning and working to better yourself are the best investments you can make.