The investing mistakes advisers want you to stop making

But, as with anything, it is easy to run head first into traps when you don’t know what you don’t know.

Few are better placed to bear witness to investing mistakes than financial advisers. Whether it is in the form of new clients that have previously been handling their own investments or existing clients that have been spooked by market turmoil, advisers get a front row seat to a whole host of errors.

Looking to understand the most common mistakes, I spoke to four financial advisers about what they see in their practice.

While the mistakes themselves were all different, there is a clear throughline that ties them together: a fundamental misunderstanding of how investing works.

The way this confusion manifests can take many forms, from being overly conservative to viewing an idea with strategy, but they can all damage investors’ long-term wealth creation.

As Verse Wealth Senior Financial Adviser Stevie-Jade Turner explains: “The key is having a well-thought-out investment strategy aligned with your goals and timeframe, then maintaining discipline regardless of short-term market movements.”

Mistake #1: Making emotional decisions

It can be difficult to stay the course when there are massive shocks to market performance, but reacting with emotion and panic selling when markets decline is a sure fire way to miss out on opportunities.

“When clients sell during downturns, they lock in losses and miss the recovery,” Turner says.

“Markets historically rebound, and those who stay invested benefit, as the best days closely follow the worst. Emotional decisions override long-term strategy and typically result in buying high and selling low or missing the opportunity that market fluctuations present to investors who contribute regularly to their investments.”

The Liberation Day crash from April 2025 is a recent example that Turner points to as causing high levels of anxiety for some clients, which is unsurprising given the sharp drop that hit global markets.

“I had a client who became very anxious about their portfolio declining and wanted to sell everything and move to cash,” she says.

“I explained that by continuing their regular contributions during the downturn, they were buying units at discounted prices. When markets recovered, those units purchased at lower prices would increase in value helping to improve the effect of the rebound - essentially they'd be buying units ‘on sale’ which helps to magnify the market recovery if you can steady your nerves to do so.”

Clients that listened to this advice saw their portfolios recover and grow above typical returns. However, while Turner was able to convince her particularly nervous client not to sell out of her positions, they did stop regular contributions.

“It was a compromise and to help them feel better, however, in comparison to their peers, that decision resulted in the last 12 months returns sitting approximately 2-3% lower than had they continued to invest during the volatility as recommended,” she explains.

Reiterating that emotional decisions typically lead to poor outcomes, Turner provides an option to avoid making this mistake when markets are down: “Try not to look at your account during these periods.”

Lesson: Stick to the strategy and don't get spooked by short-term volatility.

Mistake #2: Confusing an investment idea with an investment strategy

It’s a scenario everyone has had: you hear about the next big thing from a friend, a podcast, or social media and you want to jump in. But is this just an idea or is it an actual investment strategy?

Ashley Tilston, Founder and CEO of Spectrum Wealth Partners, says that even if the idea is a good one, taking the leap without considering your overall position can spell trouble.

“Momentum trades, high-conviction positions and thematic investing can make people a lot of money if they know what they are doing. Hedge funds, active fund managers and professional traders do this every day,” Tilston says.

“But they generally have research teams, valuation frameworks, risk controls, position-sizing rules and exit disciplines. They understand what they are buying, why they are buying it, what could go wrong, and when they are prepared to get out.

“Most retail investors do not have that same framework. They hear the headline thesis, buy into the story, and then build too much conviction without doing the work underneath it.”

Many of the buzzy themes of recent years – think lithium, cryptocurrency, gold, or tech – have made some investors a lot of money.

“The issue is not that the idea was automatically bad. The issue is that people often get in because the theme is working, because other people are making money, or because the story sounds compelling – but they do not have a clear strategy for what happens next,” Tilston explains.

“They do not know what return they are targeting, how much of the portfolio should be allocated to the idea, what would make them take profits, what would make them cut losses, or whether the position still makes sense if the story changes. 

"That is where investors get caught. It is not always the entry point that hurts them. It is the lack of an exit plan.”

An extreme example is a client that was convinced silver was the “next major wealth creation asset” and went all in on the asset.

“She had owned a residential investment property in a desirable area with good rental demand. The property was negatively geared and formed part of her broader investment position. She decided to sell the property, crystallise the tax consequences, give up the rental income and gearing benefits, and invest the entire net proceeds into silver,” Tilston says.

“The issue is not whether silver rises or falls over the short term. The issue is that she moved from an income-producing property asset into a highly-concentrated position in one commodity, based largely on conviction and external influence.”

As he notes, silver isn’t the issue. There is a legitimate investment case and taking a position would be entirely reasonable.

“The problem was how the client acted on that thesis.”

Instead, Tilston stresses investors should ask themselves: why do I want to own this, what role does it play in my portfolio, how much can I afford to allocate to it, what return am I actually trying to achieve, what could go wrong, and when would I exit?

“There is nothing wrong with being self-directed or having strong views. There is nothing wrong with investing in themes. There is nothing wrong with momentum investing if you have the skill and discipline to do it properly,” he says.

“But investors need to be honest about whether they are genuinely applying a strategy, or whether they are simply reacting to a persuasive story.”

Lesson: Don’t get caught up in a narrative, make sure you understand the investment thesis.

Mistake #3: Not investing because the market is too high

Almost the inverse of panic selling when markets are down, Omura Wealth Advisers Director Terry Vogiatzis says a mistake that investors make far too often is not buying just because the market is high.

“It may seem counter-intuitive, but investing at an all-time high has historically produced a slightly better outcome than starting on an average day. Investors forget that all-time highs are normal and don’t necessarily point to an imminent crash,” Vogiatzis says.

“Roughly 7% of all trading days are at an all-time high, and around a third of all-time highs never fall below 5% of that starting point ever again.

“Investors need to humble themselves and realise that the underlying assumption in this thought process is that we’re capable of timing the markets, which we are not.”

Instead, he says investors need to take a long-term view and remember that markets have a higher probability of increasing than decreasing.

“Even over a shorter period, the likelihood is that waiting will provide a worse outcome.”

“Focus your time on deciding on whether or not shares are appropriate for you, your investment horizon, and an appropriate allocation, rather than the timing of your entry point.”

Lesson: Just because the market is high, that doesn't mean a correction is on the way.

Mistake #4: Overly conservative or get rich quick

A pair of linked but opposite mistakes that Andrew Saikal-Skea, Founder of Saikal-Skea Independent Financial Advice, warns against can both lead to poor performance.

The first is being too conservative, which is particularly damaging for younger investors.

“If someone feels uncomfortable with volatility, my suggestion is to seek to understand it and feel more comfortable rather than just accept the lower likely long-term returns.”

The super example is one that he sees often, with clients holding a fraction of the balance they should have had because they were in balanced rather than high growth since they were 30.

“I’ve also seen quite a few people with SMSFs invested 100% in cash because they were going to buy a commercial property that they didn’t get around to purchasing so just sat in cash for years.”

On the other end of the spectrum is seeking out get rich quick schemes.

“The problems with get rich quick schemes manifest in many ways. There is generally no reliable way to beat the market unless you create something new like a new business or develop existing assets. Just investing money in something that promises a shortcut to getting ahead is often a fast way to lose money.”

In order to find the right middle ground between these extremes, Saikal-Skea says investors need to accept that aiming for diversified investments with the right risk tolerance works.

“It’s not that sophisticated but fundamentally you spend less than you earn, invest the difference and let compounding interest do the work,” he adds.

“The bonus points come from using debt effectively (with very good guardrails) and minimising tax so you have more to invest and keep more of what you grow.”

Lesson: Taking a quick look at your superannuation's investment options can have a big impact at retirement.