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Section 1

The Most Common Investor Mistakes

– And How to Avoid Them

In 2018, the Investor Education Foundation of the Financial

Industry Regulatory Authority conducted a survey to test the
financial knowledge of Americans. Although 71% of 25,000
respondents considered their knowledge of finances to be

“high,” just 43% correctly answered this question: “True or false:

Buying a single company’s stock usually provides a safer return

than a stock mutual fund.” In response to another question: “If
interest rates rise, what will typically happen to bond prices?”

The multiple choice answers provided were that bond prices

of the
would rise, fall, stay the same, or “there is no relationship
fundamentals of
between rising interest rates and bond prices.” Only 26% of

investing
respondents correctly answered that bond prices will fall in this
scenario.
people
This lack of basic knowledge of money and investing

concepts means that there are a lot of investors handling their

investments who don’t have a grasp on the basics of investing.
Unfortunately, it leads to mistakes in managing retirement

Chapter 4: The Most Common Investor Mistakes