4 Mistakes First-Time Investors Make (And How to Avoid Them)

What I wish I knew before making 100+ investments

Oct 02, 2025

If you are early in your investing journey, this is for you.

The reason this is important is because your first few investments do more than shape your returns. They shape your confidence. If you stumble in the beginning, it can take years to rebuild the trust you need (with yourself) to keep going.

I have been a Wall Street banker at Goldman Sachs and Credit Suisse, built 2 Billion Dollar companies, and invested in over 100+ deals. Looking back, I really wish someone had clued me into these mistakes before I had to learn them the hard way.

The good news is that most early mistakes are avoidable.

Once you understand what they are, you can sidestep them and give yourself a smoother path to success.

Mistake 1: Being Embarrassed to Show Ignorance

When I started investing, I often pretended to understand more than I did.

Clearly, that was dumb.

I nodded along in conversations, too embarrassed to admit that I was confused. The result was predictable: I made commitments without fully understanding things, and I learned very little. Because of this, I was not only stressed about the deal but I lost more money than I should ever have.

The better path is to invest in groups.

By surrounding yourself with others and investing together, you have the opportunity to ask questions openly, learn how different people think about risk, and observe the frameworks they use to make decisions. Instead of feeling embarrassed, you accelerate your learning by admitting what you don’t know, yet.

Meaning, every conversation becomes a lesson.

Mistake 2: Succumbing to Peer Pressure

It is surprisingly difficult to say no when a friend invites you into a deal.

Most people worry that declining will make them look uninformed, poor, or unwilling to participate. I have been there too, and the social pressure can be intense. In fact, it is way more intense than the perception around the car you drive or what Zillow thinks your home is worth.

The way to overcome this is to prepare a script in advance.

When I don’t want to do a deal, here is what I say:

“I am going to pass on this one. I am already committed to another opportunity for this allocation. Thank you for including me, and I would love to consider a future one with you.”

Here is what most people do instead:

They say “Let me think about it” and then end up ghosting. This is bad because you won’t get shown future deals.
They make up fake excuses. The problem here is that everyone knows what a fake excuse is and you lose credibility and trust.
They try to ask a lot of questions to show interest even though they are not interested. This is a waste of time for you and unfair to the other party.

Just having a simple script allows you to be decisive but kind, while keeping the door open for future opportunities. Meaning, It preserves the relationship while protecting your decision-making process.

By practicing it, you remove the fear of losing face.

Mistake 3: Trusting the Operator Blindly

Many first-time investors assume the strength of the idea is what determines the outcome.

That is not entirely true.

Over time, you realize it is always about execution.

A good idea is sexy. It can open doors and light up opportunities. But the operator makes or breaks the deal. When things go wrong, and they always go wrong, you want someone you trust in the Captain’s chair who has the mental toughness and emotional integrity to protect the company, and in-turn, your investment.

Because of this, I have made it a standard practice to vet the operator as thoroughly as the investment itself.

I have found that there is no better way to vet an operator than to run a background check.

To ensure that I don’t spook them, I say this:

“We want to make sure we’re good partners to each other. We’d like to offer a mutual background check where you can run one on us and call our references, and we’ll do the same with you.”

This creates a tone of mutual accountability and filters out anyone with something to hide.

Mistake 4: Chasing Trends Out of FOMO

Fear of missing out is 100% real.

I feel it all the time.

But having done this for 20+ years, I know that the landscape of “hot opportunities” changes constantly. A few years ago it was crypto, then it was certain real estate markets, and now it may be something else entirely. The details shift, but the emotional pull of FOMO remains the same.

Many beginners get swept up in excitement because they lack a clear investment goal. Without that anchor, it is easy to think that the shiny penny is the answer.

The solution is to tie every investment opportunity to the next milestone in your journey.

For example:

If your next goal is to build 12 months of cash reserves, the question you ask yourself becomes: “Does this opportunity help me achieve that?”
Or if your goal is to generate your first passive income check, the question to ask is: “Does this move me closer to that outcome?”

When you measure opportunities against specific goals, it becomes easier to ignore distractions. And hopefully, less FOMO.

Investing is not the answer

I once believed investing itself would make me wealthy.
Over time, I realized the difference: you don’t get rich by investing. You get wealthy by becoming an investor. And that is a skill. One you can learn slowly through mistakes, or quickly by studying those who have already walked the path.