The 4 Major Lies About Investing Debunked. Now You Can Make Smart Investments!
Information from a Gallup poll released in 2017 shows that about 54% of Americans take interest in the stock market and invest in it. This is down from the initial poll that shows about 62% invested in it in 2008, prior to the occurrence of the Financial Meltdown.
So what does that mean?
In simple terms, it means that 46% of individuals are not interested in investing. Additionally, from the 54% of those that do invest, analysts estimate that some of them actually make investments on a bare minimum.
Which begs the question; why do some people shun from making any investments in the stock market? Indeed, one of the reasons could greatly be due to personal finances.
For example, on average individuals with low incomes will be less likely to direct some of their income to the stock market. As a matter of fact, it’s probably safe to say that individuals who have amassed a lot of debt avoid the stock market as well.
So what about the remaining individuals that do not invest? For many of them, the major problem is fear. There are plenty of myths, lies, and misconceptions regarding investing in the stock market that are propagated around.
Unfortunately, it prevents potential investors from making good money on the side with their investments. With this in mind, here are some of the most common misconceptions regarding investments and how they are hindering you from successfully dabbling in the stock market.
Investing is a major risk
Though this might be partially true, it has hindered many an individual from making stock market investments. After, all, don’t they just tell themselves that stock is a big risk? Just as they increase in value, they can also easily reduce.
However, one thing that most people forget is that stocks don’t stay down forever. When you invest money with long-term plans, you will be playing the averages. Which is one of the ways that the stock market can work in your favor.
For example, having a long-term look at the situation, a simple investment of $100 in the S&P that was made in 1930 would now be a whopping $400,000 in 2018. Which would mean that you would be getting an annual rate of about 9.8%
That being said, if one makes an investment in a portfolio that constitutes of about 40% bonds and 60% stocks, it would mean that you would get an annual return that surpasses 7%.
You Will Lose Every Penny
It’s a given that you might have heard of a story or two about someone losing all their worth in the stock market. While there might be some truth to this, and it certainly sounds scary, it’s not entirely true. In fact, those who lose everything do so due to the following reasons.
They invested all their money in only a few stocks with the hope that they hit a goldmine
They made an investment in something that they had no idea about
Indeed, you can reduce your chances of losing your savings by avoiding the aforementioned mistakes altogether.
Making Investments Is Complicated
Another massive lie that is propagated all around is that investments are complicated. Though this might be partially true, and there are some investment advisors out there that reiterate this, the truth is that investments are as complicated as how you see them.
On a practical level, it is not entirely true. As a matter of fact, as a rule of thumb, one should never invest in anything that is too complicated for them to understand. This way, you will avoid yourself from getting tied up in any issues that might lead to you losing a ton of money.
Nevertheless, understand that no one needs to be a genius when it comes to making smart investments.
Thanks to the automated investment services, online investing, and exchange-traded funds, investing has become pretty basic even for the average Joe.
It is Time Consuming
Another major myth is that investment is time-consuming. However, this is if you are obsessed with investing. Instead, it is wise to be a passive investor.
This is an individual that makes their investments slowly, adds on to them, and continues with different facets of their lives.
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