New investors often make similar mistakes. Below are 3 of the most common mistakes beginning investors make:

1. Trading too often: Beginner traders often buy/sell their securities too much. They hear a hot tip on TV or a friend and feel they need to sell their current holdings and buy that stock instead. Generally, the only person who gets rich off of this is the investor’s broker, who rakes in trading fees. Trading frequently is also tax inefficient, since these investors often end up paying short-term capital gains tax instead of the lower long-term capital gains tax.

2. Panicking: One emotion detrimental to investors is fear. Yes, you should use caution and prudence when making investments. However, panicking whenever the stock market goes down never solves anything. Investors that are quick to panic often end-up buying high and selling low. Continue reading →