5 Absurd Myths About Investing Some People Believe – And What You Should Really Expect

5 Absurd Myths About Investing Some People Believe - And What You Should Really Expect

What is the best way to make your money work for you? Many people advocate being frugal and putting your cash in a bank to see it grow. However, while being thrifty is certainly a good thing,  saving isn’t always the most lucrative option if you want to multiply your wealth.

Instead of waiting passively for your money to grow in the bank, many millionaires suggest finding good investment opportunities and using the money there. Still, very few people decide to begin their journey in investing, and most of them don’t do that, because they believe in at least one of these absurd investment myths:

ADVERTISEMENT

Myth 1| You Need a Lot of Money.

We tend to imagine investors as people with tons of disposable cash. They’re the fat cats who made it big and now want to make their huge pot of cash even bigger. This is further perpetuated by Hollywood films which usually portray investors as wealthy people, sleeping on a mountain of cash, smoking expensive cigars and driving luxurious cars. The reality is, in fact, very different.

The Reality. Over recent years, investing in stocks and shares has become more democratic. You don’t need thousands in order to invest. And you don’t even need to go through a stock broker.

There are now apps out there that will help you to learn the ropes and let you invest small amounts of money at a time. Just $100 could suffice.

ADVERTISEMENT

And if you’re interested in residential real estate investing, you don’t need to have the cash up front to purchase a property. As long as your finances are in order, you could take out a mortgage, which you then use rental income to pay back.

Myth 2| It’s a Good Idea to Trust Your Gut.

When faced with the apparent unpredictability of the financial market, trusting your gut can seem appealing. There’s no need to do thorough research or stick to an investment plan. Just close your eyes and hope for the best.

The Reality. Finances and emotions don’t mix. Letting your emotional state or your gut instinct influence where and how you invest your money is a bad idea. Developing a clear strategy, using a financial advisor or doing your own due diligence is a much better approach. Many people follow the idea of trusting their guts just because they don’t want to admit they are too lazy to put in some effort to research the investment. Don’t be one of those people, do your homework, check what things are worth investing in, and you will be fine.

Myth 3| There’s Too Much Risk Involved in Investing.

People look at the fluctuations of the stock market and get scared. It seems like a risky business. So they avoid getting involved altogether.

The Reality. Investments are always something of a gamble. But, just as with gambling, you can choose between odds that generate the biggest returns and odds that are much more likely to come in.

It’s also worth bearing in mind that if you look at long term stock market trends, the ups and downs tend to balance out. It’s not as volatile as you might think.

How you go about your investment journey is up to you. Invest and risk big in the hope of impressive rewards. Or go smaller and more slowly, thinking of long term goals, to build up your funds over time.

ADVERTISEMENT

Myth 4| You Should Sell When the Market Is in Trouble.

Stocks take a tumble and the instinct is to sell, sell, sell.

The Reality. If you sell while the market is down you lock in your losses. And if you buy back when stocks start to recover, you end up paying yet more for those investments.

Keeping the faith can sometimes pay off. It might actually be a good idea to buy more when there’s a downturn as you can find yourself some bargains and take full benefit from the ensuing upturn.

Myth 5| Investing Takes Too Much Time.

You might imagine investors poring over the financial news and staying abreast of every little change in the markets. If you don’t have the spare time to dedicate to this kind of activity, you may decide that investing isn’t for you.

The Reality. There are a number of ways you can invest money without getting bogged down in the financial news. A financial advisor can take all of the technical bits (and related time commitment) off your hands.

And if you’d rather manage things yourself, you can head online. Here you’ll find investment apps and AI advisors who can help you to create a portfolio. Using information on your long term goals and how much you’re prepared to risk, they can quickly and easily give you the advice you need.

There are lots of investment myths out there. Be sure to check out the reality before you decide against investing your money. With the right strategy and knowledge, you could soon be growing your money much faster than having it sat in that savings account.

Sienna Walker is an avid careers and self-growth blogger who enjoys sharing her tips about self-improvement and life-long education. She is also a money-conscious individual and is always happy to learn new approaches to earning, saving, and multiplying her money.