Investing money can be a vital asset to keep you financially secure in the future. It can also be scary and intimidating. People always try to give you advice that may or may not be true. Some common myths about investing could be de-railing your investment. Let’s examine some of these myths and decide how to go about them.
1. You Need Money To Make Money
I only started investing once I had a certain amount of money in my savings account. I needed at least $20k in my account before considering investing. I wish someone had told me I couldn’t be more wrong. There are a variety of platforms that you could start investing for as little as $1. Check out platforms like Robinhood, Acorns, and Ally to get started on your portfolio for barely any start-up balance.
2. Leave Your Money in a Saving Account
Gone are the days when you could leave your money in a savings account and get decent growth. The interest rate on saving accounts just isn’t capable of extreme change. Transferring your money into an IRA or investment portfolio would be more beneficial. Let your money start working for you instead of sitting dormant in your savings account.
3. Investing Is Too Complicated
I used to be overwhelmed listening to people discuss investment strategies. The terms seemed complicated, and I became frustrated because I didn’t understand what they were discussing. I was surprised when I sat with a financial advisor and explained my goals. Now, I realize that investing is so much easier when you have a team helping you. Suppose you feel overwhelmed, like I did. In that case, numerous apps and advisors help you realize investing is easier than it sounds.
4. Invest in Stocks Only
For many people, the Stock Market is the only option for investing. This can be scary because we have all heard about how volatile the stock market can be, making us think we could easily lose a fortune. Other investment options include precious metals, cryptocurrency, artwork, and real estate. This is a great example of a reason to seek a financial advisor for all your questions.
5. Too Many Fees
Gone are the days when you would have to hire a broker at an expensive firm to start investing. Nowadays, there are so many options for free trading. Apps allow you to do everything that a high-powered broker used to do without the costly fees. Most of these companies will even offer commission-free trades. It has never been easier or cheaper to start growing your portfolio; you just need to start.
6. My 401K Is All I Need
A 401k is a great investment and retirement tool. Especially if your company matches your contributions. The truth is, you could be doing more with your money. Look into an IRA. This will allow you to choose your investments rather than sticking to your 401k.
7. Gold Is the Best Investment
Gold has been widely regarded as a solid investment. It still is, but some of its preconceived notions have been changing. For instance, what if miners find a new source of gold? In that case, supply drives the demand down, thus lowering the value of gold. Experts say it is better to diversify than to invest in one asset. What is the old saying, don’t put all your eggs in one basket? Makes sense in this situation.
8. Sell Before You Lose It All
The market is volatile. It can swing any which way on any given day. Everyone knows that these swings can be unpredictable. It might be tempting to sell when there is a little dip, but what happens when the stock returns and is on the up and up? You lose money; that is what happens. Be patient, see what happens, and try not to act on a whim.
9. Invest in Big Name Companies
Investing in established names like Apple, Nike, Netflix, or Amazon may seem like a good idea for beginners, but it does have its negatives. Big names have been known to grow slowly, leaving your money growing slowly. Also, it is not uncommon for big names to crash and burn. Think about Circuit City and Radio Shack. It’s okay to invest in big names, but research smaller companies on the rise as well. It could be a winning lottery ticket.
10. There Is No Risk
Some people believe that investing involves no risk. That is not the case. There is definitely an inherited risk. You need to know that when you decide to start investing. The best advice that financial advisors recommend is to be educated and aware of these risks. Be prepared to take a loss at times when you could have a hit right around the corner. Seek help when needed; it’s better not to do this alone.
11. It’s Too Risky
According to a study by Fiance Buzz, one of the top reasons Americans are not investing their money is because they deem it too risky. Of Course, it is risky. I just outlined that, but many risk levels are associated with investing. You can choose low-risk options like money market accounts. High risk equals high returns, but a slow and steady approach might ease your worries. Talk to your financial advisor about what will work best for you.
12. Focusing On Past Performance
Many investors make the mistake of looking at past performances of a stock as the only indicator of future success. Can you tell the future? Neither can I. Stop focusing on the past and look at the upside of a stock. Many companies fail before they hit it big, so follow trends instead of burying stock due to lackluster performance.
13. Buy Low, Sell High
This has been the old adage for investing. Buy a stock when it is low and sell it when it is high. A solid option, but some stocks are never low, and they can still make you a lot of money. Also, sometimes stocks are low for a reason and never rise. This sounds more like luck than anything else, but sometimes it is nice to be lucky.
14. It Takes Too Much Time
I get it; we are all busy daily, so why add another choice? This chore will affect the next 50 years of your life. With the help of investment apps and advisors, you don’t have to spend hours researching different stocks and investments. You could even take a hands-off approach to the entire thing and let your financial company do all the work.
15. It’s Too Late Now
It is never too late to start growing your money. That is one of the silliest statements I have ever heard. The earlier you start, the better, but if you have yet to start, the earliest time is right now. Stop pushing it off because, eventually, it might be too late. The longer you let your money grow, the more you will have when you retire.
