The 10 biggest investment mistakes to avoid

09 September 2021

3 minute read

“Learn from the mistakes of others. You can’t live long enough to make them all yourself.” A quote from Eleanor Roosevelt, First Lady of the United States from 1933 to 1945. This great piece of advice is equally relevant to investing, where mistakes can cost us financially. So, what better way of learning, than taking some tips from an experienced investor?

Who’s this for? All investors

The value of investments can fall as well as rise and you could get back less than you invest. If you’re not sure about investing, seek professional independent advice.

Albert Einstein once said, “Anybody who has never made a mistake has never tried anything new.” But when it comes to investing, you really don’t want to make ANY mistakes – after all, it’s your money that’s at risk. Therefore, any help and guidance on avoiding a few mistakes is always worth taking. Here, we hear from one of our experts, where he shares with us his top 10 tips on avoiding a few trip hazards.


Stephen Peters is a member of the Fund Selection team at Barclays. His job is to select those investment funds on our approved list, which invest in the UK stock market. With over 20 years’ experience, Stephen has learnt a lot about mistakes – either by learning from others or simply learning from his own. Here, he shares with us his top 10 tips on avoiding the biggest mistakes.

1. Buying past performance.

Just like you don’t drive your car looking in the rear view mirror, you should look ahead when investing. Funds that did well in the past will have a reason for doing so. That doesn’t mean they will do so in the future. It’s natural to seek the mental comfort of buying something that has previously done well. Be careful doing so – there’s a reason why you are told that past performance is no guide to future returns.

2. Believing in ‘star’ fund managers

It’s reassuring to know that our savings are being overseen by a person who has exceptional skill in picking stocks and shares. In real life, there are very few if any of these ‘stars’ in the industry. And their exceptional performance is probably down to their investment approach currently being popular, rather than being uniquely talented. Very few investors can maintain excellent performance throughout their whole career, so it’s probably best not to slavishly follow those managers who are most heavily idolised.

3. Reading fund tips in newspapers

If you read about a ‘great fund’ in the daily or weekend newspapers, there’s a fair chance that investment has been performing well in the past. Investment management groups are happy to promote these funds, so providing easy material for the journalist who is looking to fill their pages. Be sceptical about what you read, as it may be little more than thinly disguised advertising.

4. Thinking costs don’t matter

High fees and charges can significantly reduce the value of investments over the long term. Any active manager has to be able to perform well after all costs have been incurred, or else investors would be better off owning a cheaper, passively managed tracker fund. Make sure you know what you’re paying for any fund you buy, and be happy you are getting value for money.

5. Ignoring style and size factors

If you were still wearing kipper ties or bell bottomed jeans in the 1990s, you were out of fashion. It doesn’t matter if your curtain-like hair cut in 1997 cost you a lot of money at the barbers, you will look a bit out of place today. And it’s the same with funds. At times, certain types of funds are simply ‘out of fashion’. For example, there have been times when demand for technology funds has been non-existent and times when they have been the hottest thing since sliced bread. Understanding why a fund is performing the way it does is crucial.

6. Being too short term

Periods when markets fell sharply – be it in 2000-2002, 2007-9 and early 2020 – felt very serious at the time. But looking back now, they look like small blips on long-term performance charts for many funds and stock markets. Panicking when markets fall and selling your investments means you won’t benefit from being a long-term owner of shares. If you are thinking of investing in funds, be prepared to own them for at least five years.

7. Confusing good investment ideas with good marketing

As we know from bedtimes, humans enjoy a good story. So it’s natural for fund managers to promote their fund telling you that it’s going to make money from a particular trend. Inevitably though, others have already thought the same, and the investments in that sector or market may now be far too expensive compared to the profits they are expected to produce. That’s not to say there aren’t long-term trends in markets, but be cautious you aren’t being sold ‘Trigger’s Broom’.

8. Not understanding who you are

Are you willing and able for your investment to fall in value in the short term, in order for it to be able to grow over a longer period of time? Or would a few months of falling share prices make you worry too much? Knowing yourself and your own approach to investing is something that is important to do. If you don’t, you risk making investments you will regret in the future. Just because it’s the right investment for your friend, doesn’t mean it is for you. Know thyself.

9. Looking at your portfolio too often

Being able to view your investments online offers you the ability to analyse lots of interesting and useful information about your portfolio, what you hold and how they are doing. But looking at your portfolio too frequently is pointless, if you are a long-term investor. You risk making unnecessary trades, which cost you and your portfolio money. Make time to properly review your investments every six months or a year, but between that, let the funds you hold do the hard work.

10. Trying to time the market

‘Time in’ the market is more important than ‘timing’ the market. Trying to buy and sell your investments because you’ve heard that share prices are looking high or low, cheap or expensive is a very hard thing to do, and something professional investors find it hard to do consistently. Staying invested, even if it feels uncomfortable, is normally a sensible strategy.

Don’t worry

Mistakes are part of investing. By learning from your mistakes, you become a better investor. But it can be hard and it can feel uncomfortable at times. There are plenty of articles on the Smart Investor website where we explain the basics of investing, including how different types of investments work, why it’s important to take a long-term view, and how to begin building an investment portfolio.

Getting started

With thousands of different funds to choose from, it can seem like a big task to find the ones right for you. The Barclays Funds List is one way to help you narrow down the huge range of options available. Selected by Barclays’ investment specialists, it is a list of funds that have built solid reputations and established sound investment processes. Find out more information on these funds.

Correct at the time of publishing.

If you’re ready to invest but are short on time or need some inspiration, you might want to consider one of our five Ready-made Investment funds (RMI). You don’t need to be an expert – our team of professionals create and monitor our funds. The RMI are just one example of a range of diversified funds which allow you to select the level of risk you are most comfortable with. These Barclays multi-asset funds invest in passive funds across a range of asset classes and regions, offering a globally diversified solution for investors. Ready-made Investments are not the only funds that we offer and they won’t be appropriate for everyone.

Past performance of the fund and its manager are not a reliable indicator of their future performance.

We don’t offer personal investment advice so if you’re unsure you should seek that independently.

Funds are designed for the long term so you should only consider them if you can stay invested for at least five years.

These are our current opinions but the future, as ever, is uncertain and outcomes may differ.

Read the Assessment of Value report[PDF, 3.2MB] for funds run by Barclays.

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