In recent years, with the growing popularity of the NISA and iDeCo retirement savings plans, index investing has become widely recognized as a “reliable wealth-building method that anyone can do.”
However, in reality, I imagine many people are struggling with issues such as, “I started a regular index investment plan, but my balance isn’t growing as much as I expected,” or “I got anxious partway through and ended up selling.”
In this article, focusing on investment failures, I’d like to outline the common pitfalls many people face with regular index investing and explain strategies to avoid them.
Four Common Mistakes in Regular Index Investing
Index investing is a simple approach—investing in the entire market and steadily accumulating assets over the long term—but in reality, there are several pitfalls.
① Expecting Results in the Short Term
The trap that beginner investors fall into most often is “expecting results within a few months.”
Index investing is fundamentally a long-term strategy—spanning 10 to 20 years—that leverages the power of compound interest; it’s not designed to yield significant gains in the short term.
However, the reality is that many people see posts on social media or YouTube claiming “my assets skyrocketed” and become anxious, wondering, “Is my investment failing?”
② Stopping regular contributions during a market crash
When the market drops, some people stop making regular contributions or sell their holdings out of fear. However, a market crash is actually a prime opportunity to buy low and continue making regular contributions.
Successful long-term investors calmly continue their regular contributions even during market crashes.
③ Relying on social media for stock selection
- “Because this mutual fund is popular.”
- “Because an influencer recommended it.”
It’s risky to choose a product based solely on these reasons.
There are many factors to consider when selecting a mutual fund, such as fees, investment strategies, and risk tolerance.
If you take information at face value, you may end up choosing a product that doesn’t align with your investment goals.
④ Starting to Invest Without Setting Aside Emergency Funds
The money you should allocate to investing should strictly be “excess funds.”
If you start investing without setting aside money for living expenses or emergencies, you may be forced to liquidate your investments when unexpected expenses arise, which can ultimately lead to losses.
Four Strategies to Avoid Failure
Here are some strategies to help you avoid failure with regular index fund investments and steadily grow your assets.
| Remedial Measures | Key Points to Implement |
| 1. Maintain a long-term perspective at all times | Don’t get caught up in the ups and downs of short-term price movements; instead, focus on a 10-year or longer investment horizon. |
| 2. Keep making regular contributions, especially during market crashes | View market crashes as bargain sales and continue buying to lower your average cost per share. |
| 3. Choose a product that suits your needs | 手数料（信託報酬）の低さやリスク許容度を確認して選定する。Select a fund after confirming that the fees (trust management fees) are low and assessing your risk tolerance. |
| 4. Set Aside Emergency Funds | Make sure you have at least 3 to 6 months’ worth of living expenses saved before you start investing. |
In particular, global equity and U.S. equity indexes are often cited as staples of long-term investing.
Don’t simply choose them because they’re popular; be sure to verify that they can deliver stable returns over the long term.
With Regular Index Investing, “Those Who Stick with It” Win
In the world of investing, it’s often said that “those who stay in the market ultimately win.”
Regular index investing isn’t a flashy investment strategy, but it’s a solid method that reliably builds wealth over the long term.
The key lessons to be learned from these stories of failure can be summarized as follows:
- Don’t rush (don’t seek short-term gains)
- Don’t stop (keep investing even during market crashes)
- Don’t take information at face value (verify it yourself)
- Continue investing in a way that aligns with your goals
Simply by following these steps consistently, you can significantly increase your chances of investment success.
Summary
In this article, we’ve explained the common mistakes beginners make with regular index investing and the steps you can take to avoid them.
- Don’t expect results in the short term
- Continue making regular investments even during market crashes
- Don’t take information on social media at face value
- Set aside an emergency fund
By strictly adhering to these points, index investing will become a powerful tool to support your wealth-building efforts.
Understand the proper rules and approach wealth-building with a long-term perspective.
