Investing myths are costing you money
When it comes to investing and the stock market, there are a lot of misconceptions going around. Too many people want to start investing, but are scared to do it because of the negative stories that they’ve heard.
But are the rumors true? Are you better off keeping your money in a savings account?
Not. At. All. These misconceptions are costing you money so I want to help you get rid of them once and for all. Here are 7 investing myths that you really should stop believing right now.
7 investing myths that you should really stop believing
The real danger is keeping all of your money in your savings account. Inflation rates are higher than the interest rates on savings, which means that you are losing money instead of growing wealth.
Investing myth #1: You need a lot of money
Investing only for rich people? No way José!
I always claim this: “Investing does not require you to be rich, it is what makes you rich.”
Really, you don’t need a lot of money to start investing, contrary to popular belief. You don’t need to save up thousands before you can even think about opening a brokerage account. Nowadays you can get started with as little as €20 per month. Investing small amounts periodically is an amazing way to build your portfolio and it doesn’t feel as scary as putting in a large sum at once.
Look for investment plans or ETF’s, those are perfect for small budgets.
Investing myth #2: Investing is dangerous
The stock market is not dangerous or risky. Yes, there will be ups and downs, but if you stick to a long term strategy you will be just fine. Investing is never without risk, but did you know that risk can be managed?
The real danger is keeping all of your money in your savings account. Inflation rates are higher than the interest rates on savings, which means that you are losing money instead of growing wealth.
Always start by educating yourself before you build a portfolio. Investing is not the same as gambling, you need a strong game plan in order to succeed. If knowledge is the first thing you invest in you’ll be in pole position for success.
Investing myth #3: You need a master’s degree in finance
Amongst investing myths, this is a tough one to get rid of. But unlike what many people believe investing is really not that hard. It’s not necessary at all to have a master’s degree in finance to understand what happens on the stock market.
The basics are actually quite simple, and they are more than enough to build a portfolio. You don’t need the complicated stuff to get rich, that’s the beauty of it.
Let me put it like this:
When you were a toddler you thought it would be hard to learn how to read, yet here you are. And does knowing how to read mean that you should read Tolstoy or Dostoyevsky*? Nope. You can if you want to, but it is not necessary nor mandatory.
Investing is the same: dive into to complicated products if you are interested, but sticking to the basics is more than enough to let your money grow.
Learn about the basics of the stock market in a nutshell. Download my free guide now!
Investing myth #4: The stock market is boring
If you picture charts, men with briefcases and dry financial newspapers when you think about the stock market, then think again. The stock exchange reflects what happens in the world.
The world is an exciting and wildly interesting place, so the market is too! You need to start looking past the charts and see what is actually behind those numbers.
There are companies out there that try to leave an impact on the world or create amazing products. They provide jobs to the community and therefor support thousands of families. Investing is a way for you to get involved in that mechanism and to have your own impact. You get to decide which company or industry you support and I think that’s a powerful feeling.
Investing myth #5: It’s a lot of work
The amount of work that goes into your portfolio is completely up to you. You can choose to get actively involved by hand picking stocks, or you can go for a passive investing approach. There is more than just one way to invest and it all depends on the strategy you pick.
One of the most popular investing myths is that stocks are the only option, but there is so much more out there. Individual stocks require quite a bit of work, but have you considered mutual funds or ETF’s? Those products allow you to invest in multiple stocks at the same time, while a team of experts does the research for you.
Read more about the different stock market products in this blog post: 4 stock market products every investor should learn about right now.
Investing myth #6: You lock away your money for a long time
This is something I believed to be true until a few years ago. Investing does not mean that you are locking away your money for a really long time, and that you can’t access it in the meantime. There are products with an expiry date, but you don’t have to invest in those of you don’t want that.
In order to leverage the compounding effect you should hold on to your investments for as long as possible, sure. But let’s be real: life happens and sometimes you just need money unexpectedly. Money in stocks, funds or ETF’s can be withdrawn at any given point (by selling the investment).
Again, everything starts with the right knowledge.
Investing myth #7: You need to be able to time the market
Worst. Advice. Ever.
Do not ever try to time the market or you will end up frustrated and broke. Nobody has a crystal ball and can look into the future. Analysts and day traders like to make predictions about how a certain stock is going to act, but the truth is that you can never know for sure.
Of course there will be day traders who are very successful, but there are even more who aren’t. If there was a magic formula, all of the professional analysts would provide the same advice. Step away from the “get rich quick” mindset and start investing small amounts periodically. In the long run you will be rewarded.
*Tolstoy and Dostoyevsky are authors who wrote books that are famous for being hard to read.
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