Trap #3 – Mistaking "activity" for "control"

The media gives investors the impression that frequent trading, online for example, puts the investor in control of the portfolio. After all, you are the one forecasting, investigating stocks’ track records, picking the stocks, and making the trades. You are in control of your portfolio performance and yield. Right?

The fact is that frequent, often compulsive trading done from home does nothing to improve the state of your portfolio.

The more frequently you trade, the greater your risk of losses in the forms of commissions, market impact, and bid/ask costs.

Actively trading your money inside a mutual fund increases the burden of trading costs on your portfolio and lowers your chance of beating the market or achieving a market rate of return.

Remove the mystery surrounding the investment process by understanding the myths about investing.

Investment Trap #4 – Believing that all risk is equal