Seven rookie investing mistakes, and how to avoid them (OK, 10 mistakes)

Click to read my story at Grow

The folks at Acorns / Grow recently asked me to write a piece on rookie investing mistakes, which I'm proud of. You can read it here. The seven I shared with them include not investing enough, not risking enough, trying to time the market, and ignoring fees. If you are planning on investing then you need to make sure that you have done enough research and know what you are doing, you'll easily find things online like an LMFX Review, so you should be able to figure out what's best for you easily enough. Long-time readers know how much that last one bugs me, and costs you which is why looking through this forex broker list could be a good place to begin your investments. It can't be repeated enough: fees can easily cost you one-third of the money should have at retirement, and here's an example showing fees can cost you 80 percent!

(Acorns is an app that makes it easy to invest spare change after all your transactions. If you sign up for it using this link, you'll get a $5 bonus, and so will I.)

As a bonus, here are three more rookie mistakes that young investors make.

1. Once bitten, twice shy.

Look, I understand. People who graduated into the worst job market in decades, then lost nearly half their retirement savings in a market crash, are understandably reluctant to risk money in the market again. Here's the sad data: only one-third of households headed by millennials own a mutual fund (Investment Company Institute), compared to half of older Americans. And only 26 percent of those under 30 are investing in stocks, according to a Bankrate survey, compared to 58 percent of Baby Boomers. That's a mistake, that said, esg investing has gained popularity.

Facts are facts, and here's a shocking one. If you are under 35, time, and math, are on your side. People who invest for retirement from age 22-32 and never invest again have more money than people who don’t start until age 32 and invest for the next 30 years. It seems impossible, but it's true (and it’s called The Parable of the Two Twins. Look it up). If your company offers a 401(k), sign up. If it doesn't, get an IRA, now. It's that simple.

2. Forgetting that time is on your side

And there's another reason time is on your side. Yes, people can and do lose money in the stock market. In the short term. And even in the medium term. If you look very hard, you'll find a 20-year stretch in history during which a broad stock market investor didn't come out ahead. But you can't find a stretch that's 30 years or longer. If you have time ... if you are setting money aside for 25 or 30 years ... you really can count on reliable returns of 5-10 percent over the long haul. At least, that's what more than 100 years of history says. The S&P 500 has tripled since 2009, and it's up nearly 10-fold during the past 30 years. You don't want to be on the wrong side of that.

3. Paying off student loans instead of investing

The urge to pay off student loans before saving for retirement is understandable. But it's a mistake. Most student loans, while they feel onerous, carry with them a modest interest rate -- a rate that's less than long-term stock market returns. The average college student loan balance is around $33,000, an amount that can be paid off without too much pain by about age 30. On the other hand, the spectacular long-term gains from investments made during a young person's 20s cannot be recovered later (there’s that Two Twins parable again). So putting off retirement to pay prepay student loans is a mistake. Ideally, young investors should so both at once; pay down student loans while saving for retirement. In a perfect world, roughly 10 percent of income towards each.

To see the other seven mistakes, click on over to Grow's website. If you've read this far, perhaps you'd like to support what I do. That's easy. Sign up for my free email list below or click on an advertisement.