5 Common Investing Mistakes for Freelance Authors (And How to Avoid Them)

By ERAdemics Research Team

Freelance authors face unique financial challenges: irregular income, unpredictable project timelines, and the pressure to reinvest in their craft. When it comes to investing, these challenges can lead to costly mistakes—mistakes that derail passive income goals and leave creators feeling discouraged.

As someone who works with creative entrepreneurs and has 4 years of investing experience, I’ve seen the same mistakes repeat. Below are the 5 most common investing pitfalls for freelance authors—and how to fix them.

1. Waiting for "Perfect" Timing (There’s No Such Thing)

"I’ll start investing when I get a big book advance" or "I’ll wait until the market drops"—these are phrases I hear from freelance authors all the time. But timing the market is impossible—even experts can’t predict when stocks will rise or fall.

Fix: Start small. You don’t need a big advance to invest—$50/month is enough to get started. Dollar-cost averaging (investing a fixed amount monthly) means you’ll buy more shares when the market is low and fewer when it’s high—smoothing out volatility over time.

2. Putting All Your Eggs in One Basket (Lack of Diversification)

Many freelance authors invest all their extra cash in one place—usually a single stock (e.g., a favorite company) or a friend’s startup. While this can feel personal, it’s risky: if that stock crashes or the startup fails, you lose everything.

Fix: Diversify your portfolio. Invest in 3–5 different asset classes (index funds, bonds, ETFs) and 10+ individual investments within each class. For example, instead of buying only Amazon stock, buy an S&P 500 ETF that includes Amazon and 499 other companies.

3. Chasing Trends (Crypto, Meme Stocks, and Hype)

When everyone’s talking about a hot new investment (e.g., crypto in 2021 or meme stocks like GameStop), it’s tempting to jump in—especially if you see other creators posting about their gains. But trend investing is a gamble: most meme stocks and crypto projects crash, leaving late investors with losses.

Fix: Stick to boring investments. Index funds, dividend ETFs, and bonds may not be exciting, but they’ve proven to grow steadily over time. As Warren Buffett once said, "The stock market is designed to transfer money from the active to the patient."

4. Ignoring Fees (They Eat Into Your Profits)

Fees are the silent killer of investment returns—especially for creators with small portfolios. Traditional brokerages charge $5–$10 per trade, and some ETFs have expense ratios of 1% or more. Over time, these fees can eat up 20–30% of your returns.

Fix: Choose low-fee platforms and investments. Use commission-free brokerages like Robinhood or Fidelity, and invest in zero-fee index funds (e.g., Fidelity ZERO Large Cap Index) or low-expense ETFs (VOO has an expense ratio of 0.03%).

5. Forgetting to Plan for Taxes (A Costly Oversight)

Freelance authors already have complex taxes—adding investments can make it worse. Many creators forget that investment gains (dividends, capital gains) are taxable, leading to unexpected bills at tax time.

Fix: Keep track of your investments and use tax-advantaged accounts. Open an IRA (Individual Retirement Account) to invest tax-free, or a taxable brokerage account with a tax-tracking tool (most platforms offer this for free). Set aside 20–30% of investment gains for taxes—this avoids surprises.

 Closing

Investing is a marathon, not a sprint—especially for freelance authors. By avoiding these 5 mistakes, you can build a portfolio that grows with your creative career, provides passive income, and gives you the financial freedom to focus on what you do best: creating.

Remember: The biggest mistake isn’t losing money—it’s not starting at all.