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Kick any habits that stem from these myths to the curb, your portfolio will thank you.
The Market is Just Gambling
Many people believe that the stock market functions like a casino, they are wrong. There is inherent risk to investing in the stock market, but it’s not comparable to the likes of Las Vegas.
There are proven investment strategies to help you increase your wealth in the market. Investing is much more than just a blind gamble. Be sure to do your research so you can make informed decisions that will limit your losses and increase the value of your portfolio.
You’re too Young or Too Old to Invest
You might be thinking, I am already 40, it’s too late to invest now! Adversely you may think, I am only 20! There is so much time left for me to invest.
It’s never too early or too late to invest. If you think it’s too late for you, investing now could help you get that extra boost before your retirement years. Investing early will significantly impact your life. When you invest at a young age, your investments will compound again and again, which will be a huge asset to your wealth.
The moral of the story is: the sooner you can invest, the better.
Investing Is Only for the Rich
Investing is for everyone. Yes, most rich people have investments in the market, but the market can serve to change the financial future for everyone.
We get it, the investing world can be intimidating. But there is no sign at the market stating that you “must be this rich to enter.” Don’t let your preconceptions of who investing is for keep you from this essential part of your financial journey.
You can start investing with as little as $5.
Only Professional Investors Have an Edge
Many people believe that because pro investors have so much knowledge up their sleeve, individual investors can’t compete.
Yes, the stock market world can be extremely competitive for those working in finance. But individual investors aren’t playing the same game. You won’t be in competition with the pros.
All you have to do to stay on top of the game is inform yourself on investing trends and strategies. Keep an eye on the pros to learn from them, so you can enjoy the some of the same tactics they are using to get ahead.
Investing Fees Are Insignificant
Unfortunately, investing fees are not negligible, they’ll stack up fast.
There are two types of investing fees: transactional fees and ongoing fees. Transactional fees occur every time you enter a transaction, like when you buy a stock. Ongoing fees are charged regularly, like a maintenance fee for your account.
Be sure to note all of your fees so you are prepared for all charges.
Never Invest During a Recession
Bearish markets can be a great time for new investors to enter the market. Purchasing stock when prices are low can be a great way to increase your wealth over time. The key here is patience. Once you’re in, stay in until the market goes back up.
Blue Chip Stock is Always the Best
Blue chip stocks are the stocks with high market caps, squeaky-clean reputations, and great margins. These stocks are definitely on the safer side, but they are not the only avenue toward wealth creation.
You Must Avoid Risk at All Costs
Risk is a natural part of the market, so there is no way to invest in the market without assuming any risk.
The amount of risk that you can take on is a personal and depends on your investing goals. A good way to determine how much risk you can take on in is by subtracting your age by 110. The number you get will be the percentage of investments that can be on the risky side.
For instance, a good amount of risk assuming investments for a 35-year-old would be 75%. Which would mean that about 75% their investments should be in the market.
There is No Need for Active Investing
Automated investing is everywhere, and it can definitely make investing easier and more approachable. But that is not to say that automated investing has replaced the need for active investing.
Staying informed on the market and making active choices will ensure that you have control over your portfolio. Don’t restrict yourself to passive investing.
Savings Accounts are Safer
Many believe that keeping cash is safe but keeping too much money in a savings account can be dangerous. You want your buying power to grow over time and keeping too much cash in a low-yield savings account can hurt you in the long run.
Putting your assets in the market can help you earn above the rate of inflation, so which will effectively grow your savings over time.
The Bottom Line
There is a lot of misinformation surrounding the stock market, so don’t take everything you hear at face value. Always do through research before interacting with the market and remember that not all advice is one size fits all.