The Fifth Law — Avoid Common Investing Pitfalls

Avoiding common pitfalls in investing will save you a lot of money in the long run. When people make bad investments and lose money, the reasons for failure often stem from these three pitfalls: falling for schemes, a lack of experience, or a romantic desire.


  1. Avoid tricksters and schemes.
    If something sounds too good to be true, it probably is. This old fact is especially true in investing.
  2. Do not trust your inexperience.
    Inexperience may give you a false sense of confidence and can lead to bad investment decisions.
  3. Do not let romantic desires guide your investment choices.


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