Here are some investing mistakes that cost time which is a more significant loss than money.
1 Trying to make up for lost time in a hurry: We often don’t seriously consider personal finance until we reach our early to mid-thirties. Once we begin, it’s easy to feel pressured to make up for lost time and assume that further time spent analysing our needs and developing an investment strategy will waste further time. Yet, having already spent years not planning, spending a few more weeks to identify our needs and the appropriate options won’t significantly impact our timeline. Conversely, a lack of planning could lead to additional mistakes. Remember, there’s no need to rush. As the saying goes in the military, slow is smooth and smooth is fast.
2 Lack of inertia. We frequently misunderstand that inertia only pertains to a state of inaction or stationary condition. However, it can also denote a continuous state of motion. In terms of personal finance, both inactivity and constant changes can be detrimental. Once they devise an initial strategy, many investors spend years adjusting it, swayed by each new product or opinion, assuming they must integrate it into their plan.
The basics of investing have not changed for centuries. Investors can take about three months to determine if they can do it alone or need help from a SEBI-registered fee-only advisor. Then they can take three months to do it themselves, search for a suitable advisor, and pay for a plan. A total investment strategy should be ready at the end of these six months. And once it is ready, inertia is essential. I value inertia after plan creation and execution as the most critical personal finance trait.
3 Process, first, products later: Most investors who want to invest in NFOs cannot define a need suitable for the product. Our investment strategy cannot depend on new products! And btw, “trust” in an AMC is a bit like credit risk. It is largely based on ignorance and naivete.
4 Confusing simplistic with simplicity: Merely “covering the basics” such as life insurance, health insurance, a few SIPs, some EPF, PPF, US equity “exposure”, and a few tries at utilizing a goal calculator does not complete your task. Instead, these “basics” only bring us to the starting line, providing a departure point from our initial uncertainty.
We must delve into more “complex matters” such as asset allocation, rebalancing, matching investments with our needs, and product review. We should prioritize reviewing our investment strategy at a portfolio level. Yet, we often only discuss the returns of specific funds.
Avoiding these complexities is impossible. If we do, our simple plan will rapidly devolve into a simplistic one. More time is spent revisiting the same tired ideas about the “power of compounding”, the necessity of outpacing inflation, and the suitability of equity for long-term investments than the time wasted doing nothing.
5 Unable to overcome regret: Do we fear loss or bad decisions or the regret that would suffocate us due to these? I often wonder. Being emotional about logic and the big picture is the only way to fight regret. When I started and saw daily losses, I had to remind myself about the importance of financial freedom after retirement and that it is necessary to endure the pain of loss. We must devise a system to eliminate regret as soon as possible.
6 Forgetting everything is a cycle: I have seen people in AIFW say, “When liquid funds give me 9% return, why do I need anything else?” and then see the tune changed to, “But liquid funds are only giving 5-6% returns, how can I get more?”. Everything is cyclic. From long-term SIP returns in our friend equity to star ratings to interest rates to real estate returns, just about anything. If we judge something at the top of the cycle (e.g. gilt fund or gold returns), we will encounter the bottom and vice-versa after we invest. Everything is cyclic, but that does not mean we can define a frequency and know when to enter and exit. Tough luck!
7 Valuing commonsense more than data! Someone says, buy at X Nifty level and sell at Y level, or someone says the second Saturday is the best day for SIP, or a weekly SIP does more frequent “averaging”; we find it appealing. It sounds like commonsense, we tell ourselves. Practically none of these notions stand the test of rigorous backtesting. At the very least, they will not work all the time. No one knows whether they will work or not when we start investing.
Do share this article with your friends using the buttons below.
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
Podcast: Let’s Get RICH With PATTU! Every single Indian CAN grow their wealth!
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter with the form below.
- Hit ‘reply’ to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
Explore the site! Search among our 2000+ articles for information and insight!
About The Author
Dr. M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter, Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu gets a superpower!” is now available!
Most investor problems can be traced to a lack of informed decision-making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it and teach him several key ideas of decision-making and money management is the narrative. What readers say!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. – Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & it’s content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.
Your Ultimate Guide to Travel
This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)
