By Gwendoline Tan
If you’ve only got a minute:
- Being aware of common investing mistakes can help you to be conscious in avoiding them.
- Keep your portfolio well diversified across sectors, geographies and asset classes to spread out risk.
- Stay disciplined with a long-term, steady approach, ensuring you do necessary due diligence before making any investment decisions.
Many of us are familiar with the adage, “hindsight is 20/20”.
This phrase aptly describes our ability to look back on past events and perceive them with the clarity that was absent at the time they occurred. While it’s impossible to accurately predict the future, we can greatly benefit by learning from past experiences, be it our own, or that of others.
The same principle applies to investing where through learning the common mistakes made by others, you can put yourself in a better position to avoid them.
Here are 6 common investing mistakes. Do any of them resonate with you?
1. Believe in “whispers”
It is often said: “If it sounds too good to be true, it probably is”.
Today, dissemination of public information is so rapid that stock prices react within minutes of the release of new information. Investors who wait for the latest “whispers” in hopes of getting information ahead of others will likely find that the markets have moved ahead of them and priced this in already.
Another type of “whisper” could come in the form of private information – if this is the case, it is considered to be “insider trading” which is illegal, risking hefty fines and/or jail time for both the giver and receiver of such information.
As such, “whispers” usually hold little to no value to the one who hears them.
2. Put all your eggs in one basket
Traditional wisdom dictates that concentrating all of our resources in just one place is very risky. Diversification is key. Regardless of how strong your conviction is on any specific company or sector, there are many factors that can shift the markets.
This is where Modern Portfolio Theory, an investment framework developed by Professor Harry Markowitz, comes in. The main principle here is that diversified portfolios, which combine assets with low or negative correlations, tend to do better over time at lower levels of risk.
Several ways to diversify include:
Holding a portfolio of multiple stocks
While there is no magic number to this, typically a well-diversified portfolio would have anywhere between 20-50 stocks or more. This way, if one or a few of the stocks perform poorly, it would affect a smaller percentage of your overall portfolio.
Holding a portfolio across multiple asset classes
Generally speaking, a balanced portfolio would consist of 50% stocks and 50% bonds. The rationale behind this is the fact that stocks and bonds tend to move in opposite directions to each other thus balancing out the risk levels of the overall portfolio.
Asset allocation differs from investor to investor as it depends on individual risk tolerance and financial objectives, and could also include other asset classes such as cash and commodities.
Holding a portfolio across multiple geographies
Spreading your investment across multiple countries will reduce the risk you take on should something go wrong with the economy and financial markets in one country.
For example, between 2020 and 2022, many investors were heavily invested in tech stocks in a bid to maximise gains from the booming sector. However, rising interest rates and bond yields in 2022 led to a sell-off of growth stocks, including tech. Those who had portfolios diversified into commodities and inflation-hedged assets would have fared better than those invested solely into tech stocks.
From a geographical standpoint, while US large-cap equities have surged to record highs in recent years, Chinese equities have faced regulatory and economic challenges before showing signs of recovery. At the same time, gold has also reached record highs in 2025 as a safe-haven asset amid inflation and geopolitical tensions.
Diversifying across regions and asset classes helps smooth out these differences and build portfolio resilience.
Read more: Investing along the economic cycle
Exchange-traded funds, unit trusts, and discretionary portfolio solutions like digiPortfolio offer diversification across multiple sectors, asset classes, and geographies, at low costs.
To help build your portfolio, DBS investment experts have curated an essential list of funds called the CIO Insights Funds, with an emphasis on diversification and resilience.
Read more: digiPortfolio: A robo-advisor for all
Find out more about: CIO Insights Funds
3. Trying to time the market
Successfully timing the market is an extremely difficult feat which even institutional or highly skilled professionals often fail to achieve. An efficient market prices in information so quickly that investors are unable to perfectly buy at its trough and sell at its peak.
Besides, many real-world events that trigger bouts of market volatility are often unpredictable and out of our control. This is apparent in unresolved geopolitical conflicts, and the ongoing tariff uncertainties under US President Donald Trump’s administration.
Investors can take a slow and steady approach to portfolio growth, bearing in mind that history is on the side of those who can wait. The global economy historically sees longer periods of growth than recession, and stock markets see longer “bull” phases (uptrends) than “bear” phases (downtrends).
Investing with fixed amounts in regular intervals on repeat is known as dollar-cost averaging. This smooths out volatility, reducing the risk of having extreme outcomes. Invest-Saver is a regular savings plan that allows you to automate this process, starting from as little as S$100 a month.
Read more: Is DCA or lump-sum investing better for you?
Find out more about: DBS Invest-Saver
4. Not doing your due diligence
It is vital for an investor to understand themselves - their investment objectives, investment capital, time horizon and risk tolerance levels among other things. These would help to shape the investment decisions made.
You need to know how much you can invest after setting aside savings for emergencies or near-term goals. Investing monies that you might soon need can lead to making stress-driven decisions which are often irrational.
You should also have a good understanding of the investments you are undertaking. This means doing research and questioning advice from finance professionals especially if you are not clear on what has been shared with you.
Whether you are considering straightforward or complex investment options, make sure that you understand all aspects of the product, especially its payoff structure and risks involved.
5. Not taking a holistic approach to your investment decisions
Various financial metrics can play a part in helping you to make your investment decision. However, they often tell very little about an investment when used in isolation.
Taking stock prices as an example, a stock priced at S$20 may seem cheaper than one priced at S$50, However, that’s like comparing 2 houses based only on their advertised price without considering size, location, or condition. A lower price tag doesn’t necessarily mean it’s a better deal.
The same goes for valuation measures like the price-to-earnings (P/E) ratio, which compares a company’s stock price against its earnings per share. A high P/E ratio often suggests a stock looks expensive relative to its earnings. But it might also reflect investor confidence that the company’s profits will grow strongly in the future, or that it has a proven track record of delivering steady results.
Simply put, neither the share price nor the P/E ratio on its own can tell you whether a stock is truly “cheap” or “expensive”. It is prudent to use a variety of financial metrics in gauging the underlying value and long-term potential of an investment.
Read more: Investment terms and metrics to learn
6. Letting your emotions rule
Stock market returns can deviate greatly over short time span, but historically, returns tend to favour patient and calmer investors over the long term.
Being aware of investor biases can help us make less emotional decisions and better choices especially in moments of euphoria or panic.
Read more: Taking the emotions out of investing
The bottom line
Avoiding these common investing mistakes isn’t about calling all the twists and turns of the market. Rather, it’s about practicing good investment habits like building discipline, staying diversified across assets and regions, and staying the course with your long-term investment goals even when markets get choppy.
By doing so, you’ll build a stable foundation for your portfolio to grow your wealth over time.
