Many rookie investors enter the market expecting quick results or quick bucks.
It is easy to blame the market or the stocks when you lose money.
In reality, many losses come from behaviour patterns that can be avoided easily with conscious effort.
Let us break down three reasons why most new investors lose money and how not to be one of them.
Chasing Prices and Buying What’s Popular
Due to a lack of experience, new investors are usually late to the game.
They are attracted to stocks after strong price moves, and the rising prices feel like confirmation that the stock is “safe” to them.
Unfortunately, this means they buy when prices are high.
When momentum slows, they are the ones who panic and exit fast, suffering losses.
Investing in good businesses when their shares are overvalued can be a costly mistake.
A great company can still be a poor investment when bought at a high valuation.
Letting Emotions Override a Plan
Without a clear investment plan, every market move feels like a signal to act.
Making investment decisions emotionally, especially when powered by fear or greed, can become expensive mistakes.
For new investors, early gains can create overconfidence while early losses can lead to panic.
Without proper research, they sell during downturns because discomfort feels like danger, even if they are holding onto shares of quality companies.
Over time, emotional reactions will lead to repeated patterns of buying high and selling low, causing big losses.
Expecting Results Too Quickly
Rookie investors underestimate how long compounding takes.
Mistaking short-term underperformance for failure, beginner investors jump from strategy to strategy.
However, most long-term gains come from staying invested.
For example, if you had bought DBS Group Holdings’ (SGX: D05) shares 10 years ago at the start of 2016, its share price was approximately S$14.
By staying invested, your investment would have quadrupled in price alone, with the current price hovering around S$57.
Along the way, DBS also rewarded its shareholders with consistent annual dividends, which would have boosted an investor’s return.
Investing rewards patience, and time in the market matters more than constant action.
How Not to Be One of Them
As someone new to investing, slow down your decisions.
Focus first on business quality rather than recent price movements.
Understand the business you are buying, how they make their profits, their balance sheets, and their dividend history.
Blue chips such as DBS, United Overseas Bank Ltd (SGX: U11), CapitaLand Integrated Commercial Trust (CICT) (SGX: C38U), and Sembcorp Industries Ltd (SGX: U96) are companies that new investors can look into for their first investment.
Expect volatility when you invest.
Market movements are normal, and fewer trades usually lead to better outcomes.
Give your investment time to grow.
Measure success over years, not weeks or months.
The key to investing successfully is consistency, not excitement.
Get Smart: Avoid the Obvious Mistakes
Most investors, especially beginners, don’t fail because they lack intelligence.
They fail because they repeat avoidable mistakes early on in the game.
Those who succeed learn quickly, simplify their investment approach, and stay patient.
Remember, investing requires discipline, and time in the market is more important than timing the market.
Many Singapore stocks fall behind inflation, which means your money quietly loses strength over time. Dividend stocks have a very different track record. Some continued delivering 6% to 13% every year across the toughest market conditions.
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Disclosure: Wenting does not own any of the stocks mentioned.
