3 of the biggest mistakes a top Robinhood exec sees investors make, and how to avoid them

• Steve Quirk of Robinhood shared common investor mistakes and ways to avoid them effectively.
• They include failing to stick to investment plans and investing too late.
• Quirk advised using index funds for core portfolio stability and diversification.

As Robinhood's chief brokerage officer, Steve Quirk is uniquely placed to see mistakes in investor behavior — and there are three he says are commonly made.

But there's good news: in a recent interview with Business Insider, Quirk also laid out how investors can avoid them.

Let's dive in.

Mistake: Not sticking to the investment plan you originally set out

When the market turns south, some investors panic and sell near the bottom, missing out on the upside. On the flip side, some investors get greedy and don't get out of a position after big gains.

How to avoid it:

Quirk said an investment plan should be durable enough from the start to endure volatility. A good approach is having a portfolio of index funds that you don't touch no matter what (more on that below), and then know when to take gains or cut losses on your other positions, he said.

"If you made this plan and kind of set these parameters, when something happens, either for the better or for the worse, you should stick with your plan," Quirk said. "In other words, the stock's now at 50% suddenly, and you said, 'Well, I was going to sell it at 30%, and I think it's gonna keep going.' No, you should sell that."

Mistake: Not putting your money to work early enough

Starting early in investing is crucial. The longer your timeline, the more you can withstand volatility and be aggressive with your portfolio.

More importantly, investing early allows you to take advantage of compound interest. For example, over a 40-year period, $10,000 invested at an assumed annualized return of 6% turns into more than $100,000 without any further contributions.

How to avoid it:

One barrier to investing is feeling you don't have enough disposable income to put to work in the market. But fractional shares allow one to invest virtually any dollar amount.

"You can open an account with $50," Quirk said. "You can invest $5 and you're going to learn something, even if you're not going to have magical returns."

He added: "The number of people that I've talked to in my whole career who are at 40 or 50 years old, they're like, 'Oh my God, if I would've started this, you know, 10, 20 years ago, I can see what would have happened with compounding and the returns."

Mistake: Investors can be too concentrated

This means portfolios are heavily dependent on the success of just one or a small handful of investments, putting them at greater risk if those trades suffer losses.

How to avoid it:

Quirk shared the investing philosophy he recently imparted on his kids, which includes building a diversified core portfolio of four stock indexes: the S&P 500, the Nasdaq 100, the Russell 2000, and the MSCI Emerging Markets index.

There's also room to allocate a small percentage of your portfolio to individual investments, he said, as well as to hold a bit of cash to deploy when stocks see a pullback.

Quirk said there's an easy way to tell if your portfolio is too concentrated: if you're losing sleep over it.

"If you are in a position that you're up at night looking at all the time or constantly concerned about, it's probably too big," he said.