What mistake do investors often make regarding the amount of money they invest?

Investors commonly fall into the trap of investing more money than they can afford, which can lead to significant financial strain. This mistake arises from the emotional influences on investment decisions, such as the fear of missing out on potential gains or the excitement of market trends. Overextending financially can result in being unable to cover essential living expenses, leading to panic selling during market downturns or being forced to liquidate investments at unfavorable times.

Additionally, spending beyond one's means can diminish the overall investment experience, as financial stress can affect decision-making and lead to riskier behaviors. A balanced approach to investing requires understanding one’s financial situation thoroughly, ensuring that there's a buffer for emergencies or unexpected expenses, and only committing funds that won't jeopardize financial stability if the investments do not perform as expected. In doing so, investors can remain calm and rational, focusing on long-term strategies rather than short-term pressures.