4 Mistakes I Made My First Year Investing

Learning from others mistakes is much easier than learning from your own. Check out a few of mine.

Learning from mistakes is supposed to be one of the greatest ways to learn. Tell that to all the stock market investors who lost thousands of dollars in a single instant on the stock market. A much better way to learn stocks is to learn from other people's mistakes. Here are ten doozies I committed in my first year.

Buy Good Companies at Bad Times

My first purchase on the stock market was Apple stock. It seemed like such a no brainer at the time. I am sure millions of others have made the same mistake. Since purchasing Apple stock I have lost 25% of my investment.

This doesn't reflect poorly on Apple. Every company has good and bad market years. The last year has been one of Apple's worst. I quickly learned that unless you plan on holding for many years, make a list of companies that you would like to buy, then wait for the charts to point to a good buying point.

Waste Money on Broker Fees

Finding a broker seemed too easy when I first signed up. I used a list of online stock brokers from Beginning Stock Trader and chose the one with the best deal at the beginning. That was TD Ameritrade and they offered 100 free trades. I thought that sounded like more than I would make all year. Turns out I made them in the first month.

I ended up liking TD Ameritrade and not wanting to switch. At the end of the year I had lost a solid $500 on broker fees. The lesson learned was that if you do not have a large sum of money to trade, don't bother with the expensive brokers. Just use Robin Hood.

Trade on Emotions

This is the number one rule in trading, but I believe almost all beginners make it. I remember distinctly one morning when I was watching stock prices in the premarket. A stock I owned for a company called Micron was having it rough and tanking in the premarket. It was down about 10%, and was a huge part of my portfolio. I knew Micron had good fundamentals, and had no reason to be dropping. But in the moment, seeing my account value drop off a cliff and continue dropping scared me to death. I sold all I had. Within ten minutes the stock had balanced out, climbed back to previous levels and ended positive for the day. I learned to think with my brain, not with whatever part of me has emotions.

Investing Need Money

Another big no-no in investing is putting in money that you actually need for something. In this case it was money for a home. We had it in a stock account and most of the stocks seemed pretty safe, so we left it until two weeks before the purchase. About 5 days before pulling it out, we suffered through Black Monday, one of the biggest single-day drops in stock market history. I knew if it dropped any more we would not have enough for the home, and I was forced to pull out at the very bottom of Black Monday. We lost over $3,000 that day. I knew the markets would bounce back, I was at least 90% sure. But we couldn't risk it not happening in the next two weeks, and were forced to take a loss. I learned to never invest money you may have to pull out in the next year or two.

I made plenty more mistakes. I have now solidified a strategy and make a decent amount each month in returns. I still haven't made back everything I lost with mistakes, however. If you are going to invest, don't make my mistakes. Learn from everyone you can and you won't have to learn from your own pain.