Common Mistakes Made by ETF Beginners
What to avoid in your first few months, based on the most frequent mistakes new investors make.
Investing in ETFs is technically fairly simple, but certain behavioural mistakes crop up often among beginners — knowing them in advance helps you avoid them.
1. Selling during market downturns
One of the most costly mistakes is panic-selling during a downturn, turning a temporary paper loss into a real one. An equity ETF is designed for a long time horizon, with expected swings in value even significant ones in the short term.
2. Chasing past performance
Choosing an ETF just because it performed well last year is a common mistake: past performance doesn't guarantee future returns, and often the sectors or regions that have performed best recently are also the most "expensive" at that point.
3. Over-diversifying with too many similar ETFs
Buying 8-10 different ETFs that mostly overlap on the same companies (e.g. several global equity ETFs) doesn't add real diversification, just more complexity in managing your portfolio.
4. Ignoring total costs
Don't just look at the ETF's TER — also consider the broker's order commission and any FX fee. On small, frequent contributions, these costs can matter more than the TER itself.
5. Not having a written plan
Deciding your allocation (how much in equities, how much in bonds) and time horizon before you start, rather than changing strategy every time the market moves, helps avoid impulsive decisions.