Investing is a journey, and like any good journey, it’s filled with twists, turns, and, yes – mistakes. So, Hayden and Dave have dived into the most common investing missteps they've made along their paths to Financial Independence , sharing insights that may save other investors some pain. Here's what they’ve learned from their years of trial, error, and growth in the world of share investing.
Starting out: the lure of stock-picking
Many investors fall into the stock-picking trap when they first start out, and Dave was no exception. When he began investing nearly a decade ago, Dave tried building his portfolio by handpicking individual stocks .
“This is something I did in my early on in my share investing days," he says. "I tried to pick stocks, rather than picking managed funds or index funds.”
He soon realised that picking stocks without solid knowledge or analysis is a risky business, and he eventually switched to investing in diversified funds like ETFs.
Hayden, on the other hand, managed to sidestep this pitfall early on. He leaned towards ETFs due to the knowledge he gained through Pearler and the straightforward, low-maintenance nature of these diversified investments.
Overcomplicating the portfolio
A common trap among investors is overcomplicating portfolios by holding multiple funds with overlapping assets . Dave and Hayden discuss the impact of owning too many ETFs , often from different providers, even though they may have similar holdings.
“It’s such an easy trap because you learn about ETFs, and your brain thinks: ‘coverage, good,’” Hayden says.
“Some investors might buy five or six, or ten... I’ve known people who have bought 50 ETFs.”
The preference they've reached? Keep it simple. Instead of trying to cover every corner of the market with multiple ETFs, both Dave and Hayden have trimmed down their portfolios to only a few essential holdings. They believe thiis approach saves on fees and makes managing investments much easier.
The media frenzy: too much news and predictions
As new investors, many of us fall into the cycle of consuming financial news, letting market predictions and hype drive our decisions.
Dave recalls reading tonnes of articles predicting market movements. But over time, he noticed a pattern: these predictions were often wrong.
“If you read it for long enough… after about two years, you’ll realise that no-one has any clue what they’re talking about – they’re just guessing,” he says. “So the idea that you can use that information to help you with your long-term investing is absolutely ridiculous.
“The media doesn’t care how you do. If you’re investing, they’re not there to help you. You’re being manipulated at best.”
Hayden shares a similar experience from his days dabbling in cryptocurrency , where he frequently reacted to market news.
“I was reading an article that would suggest why Bitcoin was about to go up or why it was about to crash," he says. "After enough mistakes, you just realise none of it is true."
Their personal takeaway? Stop letting the news dictate your strategy. Instead, focus on the long-term, ignoring short-term noise that can trigger unnecessary reactions.
Checking prices too often
Checking your portfolio every day can be tempting but, as Dave points out, there’s a risk of overreacting to short-term fluctuations .
“There's a 50-50 chance when you check your portfolio," he says. "If you're doing it on a day-to-day basis, there's about half a chance that your portfolio is going to be higher that day than it was the previous day. There’s about a 50 percent chance that it’s going to be lower as well.
“The problem is, it’s been studied and researched and well-known now that we tend to feel the joy of gain much less than we feel the pain of loss.”
He suggests checking less often.
"If you need any motivation to check it a little bit less often, maybe once a week or once every two or three days instead, maybe hide [your app].”
Hayden, on the other hand, does check his portfolio regularly but only out of curiosity, not as a trigger for action.
“I like looking at my portfolio a lot because it constantly reminds me how much it just doesn’t make sense what it’s doing all the time,” he says.
He notes that this helps him stay grounded when things seem chaotic.
Avoiding the dogma of Dividend Reinvestment Plans (DRPs)
Hayden used to be a big advocate for Dividend Reinvestment Plans (DRPs), which automatically reinvest dividends into the stock rather than paying them out. But he later realised that his strategy didn’t require this extra layer of complication.
“I had assumed that if it’s done through DRP, you’re not taxed on dividends. That’s just intuitive because it’s not coming into my bank account,” he explains. “And then after two years of tax returns, I was like: 'wait a minute, what is this?'”
Now, he prefers receiving his dividends as cash and reinvesting them as part of his overall strategy.
For investors who find themselves struggling to save, Dave points out that DRPs can still be helpful.
“If money hits someone’s bank account [and] they’re going to spend it, then obviously enrolling in a DRP plan is probably going to be the best move,” he notes.
Revisiting assumptions regularly
Another big lesson Hayden and Dave share is revisiting their assumptions over time.
Hayden recalls: “When I got my first portfolio, I was really big on dividends… because I was excited about Financial Independence and passive income . So why would I invest much in the US when they don’t really pay dividends?”
By expanding his portfolio, Hayden adjusted his approach over time to better fit his goals. Dave echoes this, explaining how he initially focused on property investment but eventually shifted toward shares as he learned more.
“I would encourage everyone to revisit your assumptions around your investment strategy,” Dave says. He suggests that “a lot of times you’re going to make no changes… but I wouldn’t assume that it’s always going to be the best idea.”
Revisiting assumptions every so often can help you identify whether your needs have shifted or if there’s a better way to achieve your goals.
Common mistakes as part of the learning process
In investing, mistakes are inevitable, but they’re also a valuable part of the journey.
“If you've made mistakes and you can look back at them now and cringe a little bit, that's probably a good thing," says Dave.
"Because it means you're now a smarter investor.”
By making mistakes early, when your portfolio is smaller, you’re typically dealing with lower dollar amounts, which can be a relief. As Dave notes: “If you can frontload your mistakes to when you're not investing a lot of money, that can be really, really useful. Then, when you're investing large sums of money, you've got the mistakes all out of the way and you've already solidified your approach.”
Hayden and Dave also encourage listeners to share their learning experiences with others.
“We're big proponents of sharing the investing journey with your friends, with family, with anyone who's interested,” Dave says.
This kind of openness, as they point out, builds a strong investing community where learning from each other’s mistakes becomes part of the journey.
Wrapping up
Investing is a journey, not a race. By learning from past mistakes, staying informed, and making thoughtful choices, you may be better equipped to avoid some of the biggest pitfalls along the way. From stock-picking and overcomplicating portfolios to getting distracted by the media and checking prices too often, there’s a lot to navigate. But with patience, perspective, and a focus on the long term, investors can build their portfolios in a way that’s steady and rewarding.
If there’s anything this episode of Aussie FIRE teaches us, it’s that investing is deeply personal and constantly evolving. Mistakes may be part of the journey, but each one offers a lesson that helps shape a more resilient and savvy investor.
We're always keen to hear your thoughts and topic suggestions, so hit us up at hello@aussiefirepod.com . Head over to Pearler for resources, calculators, and community insights that complement what we chat about on the show.
Until next time, keep dreaming big and living on your terms. Catch you on the next one, and happy long-term investing!
Dave and Hayden