2. Not rebalancing the portfolio regularly

Every investor is subject to the whims of the market. Here's one way to profit from the inevitable ups and downs. Let's say your portfolio is made up of mutual funds. At the end of each year, consider how much you have in each fund. Then target new money to the funds that have done poorly. It might seem counterintuitive, but rebalancing keeps your portfolio diversified by preventing your wealth from becoming concentrated in a small number of investments.

Better yet, rebalance your portfolio by selling some of the winning funds and putting the proceeds into the laggards, so each fund ends up with the same percentage of money it started with the year or quarter before.

3. Buying stocks with high dividend

A profitable corporation can distribute profits in the form of dividends. In other words, each share gets a certain amount of money. While it's great to get a dividend, it's not wise to hunt them. So, the mistake that a lot of guys make is to buy a stock shortly before they expect it to pay a dividend.

While that sounds good, the problem is that the price they pay for the stock reflects the anticipated dividend. In other words, shopping for dividends means you're overpaying. It's good to have dividend stocks in your portfolio, but they're not the only way of making money. Instead, hold a diverse portfolio, knowing that some of your stocks will likely pay a dividend and others won't for a very long time.