Investing is making your money work for you. You can make your money work for you with a variety of vehicles like mutual funds, stocks, bonds and real estate. Myths about investing are everywhere! Myths about investing are especially rampant on social media. The thing is myths about investing are keeping people on the sidelines.
Investing truly is the only way to create long lasting wealth.
Check out these 5 myths about investing debunked.
Myth: You need tons of money to start
Most people assume that you have to have a ton of money to start investing. That is 100% false.
Thanks to the 21st century there are many investing apps and platforms that require low minimums in order to get started. In fact, there are two apps that I personally use, Stash and Acorns, that allow you to invest with only $5. Both Stash and Acorns allow you to invest your money into ETFs (or exchange traded funds).
If you are looking to invest in individual stocks, there is an app called Robinhood that allows you to buy stocks with no trading fees or minimums.
Related: How to Invest with less than $100
Myth: Too complicated to understand
Many people assume that investing is too complicated to understand or that you need to have a finance degree to succeed. Although investing takes some time to learn, it is not too complicated to understand for the average person.
Just like learning anything new, if you want to succeed at investing you have to do research. Research can be done in a variety of ways like visiting financial blogs and websites as well as reading books about investing.
Just take 15 minutes each day to read about investing. Before long, you will know more than the average person.
Myth: Past performance predicts future returns
The myth that past performance predicts future returns trips up even seasoned investors. You hear about a hot stock on the news or radio that has performed well over the past few months, and then you want to get your hands on the stock.
Prior to investing your money into a stock just because it has done well in the past, consider the future success of the company and how that relates to the stock. Some stocks do follow a cyclical pattern; however, do your research and don’t only follow the past performance.
Myth: You need to be 100% debt free before you start
Millennials often say that they want to be debt-free before they start investing. It is great to consider your debts prior to investing, but if you stay on the sideline too long you could be missing out on valuable time in the market.
With the rate of inflation and increase in the cost of living, it is estimated that millennials will need close to 2 million dollars to retire comfortably. Therefore, it is important that you start investing as soon as possible. If you want to target certain debts before you start investing, that is fine.
For example, you should get rid of high-interest debt before investing. High-interest debt especially meaning credit cards and revolving loans. For the most part, credit cards and revolving loans will cost you more in paying interest than you will make in your investment.
Myth: It’s the same thing as gambling at the casino
A myth about investing that is often proclaimed on social media is that investing is equivalent to gambling. That is just not true.
When you gamble, you don’t own anything. When you are investing in stocks, you own a share of the company that you have invested in. If a stock goes up in price, then you can sell it for a profit. Although the stock market has a history of volatility, overall long-term investors profit from a buy and hold strategy.
These 5 myths of investing cause too many people to leave their money on the sidelines like in savings accounts instead of investing.
If you want to get started investing today, check out my favorite app for beginners: Acorns. Acorns is an investing app that rounds up your spare change from debit card and credit card transactions. Then Acorns uses the spare change to invest in ETF (exchange traded funds) based on your time horizon and risk profile.
Click here to try Acorns for yourself. You’ll get $10 added to your account if you join by Jan 10th!
For a full review of ways to invest just starting out check out these posts:
- 3 Apps to Start Investing with $5 or less
- Acorns: Start Investing Your Spare Change
- How to Invest with $100 or less
What myths about investing have you listened to in the past?
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