The Common Financial Pitfalls Young Investors Face

by | Dec 22, 2025 | Our Blogs

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Common Investing Mistakes to Avoid in Your 20s and 30s?

Getting started with investing early can be one of the most powerful financial moves you ever make.

However, it can also be overwhelming, especially when balancing student loans, rent, career shifts, and social pressures.

According to a recent report by Empower, the average American believes you should start saving for retirement at age 27.

And while starting in your late 20s and aiming to retire by your late 50s may seem ambitious, it’s not out of reach.

But success requires more than just opening a brokerage account. It demands discipline, planning, and a willingness to learn.

Here’s what every young investor should know before they dive in.

Table of Contents

What Are the Most Common Mistakes New Investors Make?

The biggest mistakes new investors make aren’t just about picking the wrong stock; they’re about the approach.

Some people wait too long to start, thinking they need a lot of money, while others follow hype instead of building a real plan.

Many don’t realize the importance of consistency, tax strategy, and understanding risk.

These early missteps can lead to missed growth, avoidable losses, or years of delayed progress.

The good news? They’re easy to correct once you know what to look out for.

Why Do So Many People Struggle to Start Investing in Their 20s or 30s?

The biggest obstacle for most young investors is mindset.

Many feel like they don’t know enough to get started, or they assume investing is only for wealthy people. Others are juggling debt, bills, and goals like buying a home or traveling that make the long-term planning feel less urgent.

But here’s the truth: You don’t need to be rich to invest. You just need to start.

Even small, regular contributions can have a powerful impact over time.

What Happens If You Wait Too Long to Start Investing?

When you wait to invest, you miss out on your most valuable asset — time.

The earlier you begin, the more time your money has to grow through compound interest. As a result, delaying just 5 years could mean hundreds of thousands less in retirement.

For example, using a standard compound interest formula with an assumed annual return rate of 7%:

  • Investing $200/month at age 25 could grow to over $500,000 by retirement.

  • Waiting until age 35? That same monthly investment might only reach $250,000.

The bottom line?

Start small, but start now.

It’s less about the amount and more about the consistency.

How Can I Invest Without Giving Up My Lifestyle?

Budgeting can feel restrictive, especially when you’re young.

But investing doesn’t have to mean giving up your life.

Instead of spending what’s left after you pay your bills and live your life, flip the formula to pay yourself first.

Set up automatic transfers to your investment accounts (even if it’s just $100/month).

Treat it like a non-negotiable bill. Then spend what’s left without guilt.

Over time, this creates a sustainable balance between living well now and building wealth for the future.

Is It Safe to Follow Investment Advice I See Online?

Social media is full of investing tips, crypto hype, and get-rich-quick schemes.

And while some creators certainly offer helpful info, much of it is one-size-fits-all or flat-out wrong.

Taking random advice without understanding the context can lead to unnecessary risk, tax issues, or poor diversification.

You wouldn’t take medical advice from an influencer, so don’t build your financial future on it either.

Instead, focus on learning the basics:

  • How different accounts are taxed

  • What fees you’re paying

  • How your investments align with your goals

Better yet, work with a fiduciary advisor who can teach you while also guiding and implementing your strategy.

How Much Risk Should I Take as a Young Investor?

It’s tempting to go “all in” on high-risk assets like crypto or meme stocks, especially when you see others making fast gains.

But extreme risk often comes with extreme losses.

On the flip side, some investors are so afraid of losing money they sit in cash too long, which loses value over time.

As a younger investor, you can afford more risk. But it should be smart risk.

That means:

  • Diversifying across different asset classes

  • Rebalancing periodically

  • Staying focused on long-term goals instead of short-term noise

When Should I Start Saving for Retirement If I’m in My 20s or 30s?

Right now. Even if you’re not planning to retire until 60+, your future self will thank you for starting early.

Compound growth means every dollar invested now is worth more than a dollar invested later.

If your employer offers a 401(k) match, take full advantage because it’s free money.

And if you’re eligible for a Roth IRA, even better: your money grows tax-free.

You don’t need to max out every account to make progress. Start with what you can, and increase contributions as your income grows.

Do I Really Need a Financial Plan in My 20s or 30s?

Yes, but it doesn’t have to be complicated.

Think of a financial plan as a GPS for your money. It shows you where you are, where you want to go, and what turns to take along the way.

Without one, it’s easy to drift, overspend, or miss key opportunities.

A basic plan can help you:

  • Define your short and long-term goals

  • Decide how much to invest each month

  • Choose the right accounts and strategies

  • Stay on track during market volatility

And as your life changes, your plan should evolve too.

That’s where an advisor can really help by updating your plan as your career, income, and family grow.

What Steps Can I Take Today to Be a Smarter Investor?

Smart investing isn’t about picking the next big stock.

It’s about building habits, understanding your goals, and aligning your money with your values.

Here’s what you can do today:

  • Start automating your investments

  • Learn the basics of diversification and risk

  • Track your spending so you know where your money goes

  • Set one financial goal for the next 90 days

  • Talk to a professional, even if you’re just getting started

At Concenture Wealth Management, we work with investors at every stage, including those just getting started.

If you’re in your 20s or 30s and ready to get serious about your financial future, we can help you build a plan that fits your life now and your dreams for later.

Schedule a complimentary introductory meeting with our advising team and take your next step with clarity and confidence.

About The Author

Robert G. Gilliland, CRPC®Managing Director and Senior Wealth Advisor

Robert’s professional journey seamlessly blends individual excellence with exceptional team-building skills. While earning his Bachelor’s degree in Finance from Stephen F. Austin State University, he financed his education by managing a restaurant franchise — a role that honed his abilities in time management, leadership, and financial oversight. At Merrill Lynch, Robert quickly distinguished himself through […]

Learn more about Robert
Legal Stuff

The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation. Material provided by Concenture Wealth Management.