Investing for the first time can feel overwhelming; with so much misinformation floating around, it’s easy to make costly mistakes. In 2024, Action Fraud received nearly 26,000 reports of investment fraud, with victims collectively losing over £650 million, marking a 13% year-on-year increase.1

With this in mind, the forex broker experts at BrokerChooser have shared the ten most common mistakes new investors make, alongside advice on how to avoid them and invest wisely.

1. Chasing Tips from Fin-fluencers Without Research

Social media has made financial advice more accessible than ever, but there’s a downside to this, too. Many new investors get drawn in by catchy “fin-fluencer” posts promising quick riches through the latest hot stock or cryptocurrency, with reports showing nearly 17% of investors admitted to losing money by following influencer advice.t

The problem is that these tips often lack real backing and are driven by hype instead of facts. People who jump in without researching usually buy overpriced assets just before their value drops, leading to big losses.

Adam Nasli, Head Analyst from brokerage and forex experts BrokerChooser, shares:

“The excitement around social media tips is understandable, but blindly following hype can be a quick way to lose money. New investors need to pause, research and develop a solid understanding before acting on any advice. By focusing on trusted sources and using tools that compare brokers and investment products, you can build a foundation that helps you make smarter choices.”

2. Failing to Set Clear Investment Goals

Jumping into investing without clear goals is a common mistake for beginners. If you don’t know what you’re saving for, whether it’s a house, retirement, or setting up an emergency fund, it’s essential to create a plan that works for you.

Some people treat investing like gambling, hoping for quick wins, but that usually ends badly. Having clear, realistic goals helps you understand how much risk you can handle and what investments suit your timeline.

Adam Nasli, Head Analyst from BrokerChooser, shares:

“Setting realistic goals is the foundation of successful investing. It helps you pick the right assets, plan the right timeline and stay committed even when markets get rough. If you’re unsure where to start, educational guides can help you understand risk and find investments aligned with your objectives.”

3. Ignoring Fees and Costs

It’s easy to overlook fees when you’re new to investing, but they can quietly eat away at your returns over time. Whether it’s broker commissions, fund management fees or platform charges, these costs matter, especially if you’re starting with smaller amounts. Reports show that 20% of investors don’t closely track how their investments are performing, while over 16% don’t fully understand the fees or taxes they owe.2

A small annual fee might not seem like much at first, but over the years, it can seriously reduce your overall wealth. It’s important to use clear tools that help you find low-cost platforms that fit your needs.

Adam Nasli, Head Analyst from BrokerChooser, shares:

“Even a 1% fee can make a big difference. Most beginners should prioritise low-cost brokers and funds to keep more of their gains. Choosing broad market ETFs (exchange-traded funds) instead of pricey active funds is a smart way to stretch your money further.”

4. Lack of Portfolio Diversification

Putting all your money into one stock or sector is a common mistake. It might seem right to back a favourite company or the latest hot industry, but focusing your investments like this can leave you exposed to big ups and downs. One in four Americans say they don’t know on whether their investments are diversified, and a further 42% say they don’t actively monitor to make sure their investments are diversified.3

Spreading your money across different asset types, sectors, and regions helps lower risk and smooth out returns over time.

“Diversification is simply not putting all your eggs in one basket. It’s one of the best ways to manage risk. For beginners, broad-market ETFs or mutual funds offer instant diversification without the stress of picking individual stocks. You can always adjust your portfolio as you learn more.”

5. Chasing Timing Over Time

Trying to pick the perfect time to buy or sell is tempting, but it’s nearly impossible to do it right every time – even professionals find it hard. The truth is, staying invested for the long haul usually works out better.

Putting in fixed amounts regularly can help you avoid emotional decisions and benefit from market dips without having to time them.

“Trying to predict market moves is the biggest mistake. Time in the market beats timing the market every time. Patience and a focus on long-term goals are key.”

6. Overtrading and Excessive Activity

Many new investors feel the need to trade frequently, reacting to every headline or price move. Although tempting, this habit can quickly build up unnecessary fees and taxes, ruining potential gains. Overtrading often comes from a desire to feel in control, but it rarely leads to better outcomes.

“Overtrading increases costs and tends to reduce returns. Instead of constantly tinkering, set a clear investment plan and review your portfolio at regular intervals, making changes only when necessary.

7. Not Understanding Investment Products

The variety of investment products can be overwhelming. From stocks and bonds to leveraged ETFs (exchange-traded funds) and options, beginners might be tempted by complex products promising big returns. But these often carry risks that aren’t easy to understand, which can lead to confusion or unexpected losses.

“Complex financial instruments can carry hidden risks that beginners might not realise. Sticking to simpler investments until you gain experience is the safer approach.”

8. Neglecting Tax Implications

Taxes can make a big difference to how much you actually earn from investing. Many new investors aren’t aware of things like capital gains tax, dividend tax, or tax-efficient accounts such as ISAs. Missing out on these can mean paying more tax than necessary and slowing your money’s growth.

“Tax efficiency is crucial but often overlooked. Understanding your local tax rules helps you keep more of your gains. Planning with tax in mind ensures you don’t lose money unnecessarily.”

9. Letting Emotions Drive Decisions

It’s natural to feel fear during market downturns or excitement when prices rise. However, these emotions can push investors to make impulsive decisions, such as panic selling during a dip or chasing after overpriced assets. While these reactions are understandable, they often work against long-term investment success.

“Emotional investing often results in losses. Discipline and planning are your best defences against market noise. Regularly reviewing your strategy helps maintain perspective and avoid knee-jerk reactions.

10. Not Using the Right Broker for Your Needs

Choosing the right broker is important, especially for beginners. The wrong platform can mean paying higher fees, having fewer investment choices, or getting poor customer support. Many new investors pick a broker without comparing their options first.

“The right broker makes investing easier and more enjoyable, especially for beginners who need guidance. Look beyond fees, consider usability, resources, and user reviews to find your best fit.