If your money is all sitting in a cash savings account, you might find yourself being encouraged to start investing in other ways soon.
The government is keen to get more people investing and has various plans to do so – including getting banks to raise awareness of investing and sending savers with low-interest accounts details of possible investments they could make.
When done right, investing has the potential to bring in much higher earnings than cash savings, because the latter relies on interest, which has a lower return.
This push for investing is all well and good if it puts more money in our pockets, but experts want beginners to educate themselves before getting started.
There are some key mistakes newbies often repeat, many of which will stop your money from growing – and maybe even may result in a loss of funds.
Here’s everything you need to know…
The most common mistakes when investing
James Bentley, director at Financial Markets Online, says the most common mistake he sees is people ‘not holding their nerve’.
‘It can be alarming to see one of your carefully chosen investments tip into the red, and people who are new to investing sometimes panic sell when things don’t go to plan,’ he says.
‘But selling too soon can mean you lose out big time if the asset goes on to bounce back.’
James claims this happened a number of times to Tesla. In 2024, Tesla shares fell 29% during the first three months of the year. They then took off, ending 2024 up 63% in total.
‘There’s a similar pattern going on this year. Tesla shares plunged 36% in the first quarter of 2025, but they have now fully recovered and are currently worth 6.4% more than they were at the start of January.’
In his opinion, it’s worth waiting things out, because markets do dip and fluctuate. The key is to remember that investing is a long term game, and not for quick wins – especially as a beginner.
Christian Harris, an analyst at Investing.co.uk, also warns people against pulling out their money too soon, saying the best thing you can do is ‘leave it and forget about it’, then bank it ‘many years down the line’.
And there are several other trends Christian is also concerned about, especially as talking about investing has become popular among money influencers.
‘Don’t chase “hot tips”,’ he says. ‘Buying whatever’s trending instead of sticking to a plan isn’t advisable. Social media or even friends and family often aren’t experienced, trained investors. Ignore the pulls to move money from your long-term plan, especially for high-risk, short-term investments.’
Another error he sees beginners make is overcomplicate their portfolio. It’s not worth picking individual stocks initially before you’ve learned the basics, he says.
‘Index funds already do the hard work – automatically kicking out poor performers and adding firms that are doing well,’ he says.
Before you commit to an investing platform, he recommends doing some research on fees, too. Many will charge you just to have an account, andpeople often forget about this.
Christian warns: ‘Small charges can quietly eat into long-term returns. Over many years or decades even what seem like insignificant differences in percentage fees for investments like funds can add up to many thousands.’
And the most important mistake people make? Investing money they can’t afford to lose. Christian claims you should never dip into rent or emergency savings.
‘The markets can, and will go down – you don’t want to risk not being able to access essentials.’
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