21 Nov Some Myths in Investing You Should Probably Ignore
Investing can be a confusing enough topic to the average layperson. However, the prevalence of myths in the space makes it appear more unclear and puzzling than ever. With that conundrum in mind, we wanted to dispel some of the biggest myths in investing before they throw your off track:
Myths in investing #1: Stocks Are Too Risky
Yes, it’s true that stocks are risky. But risk is an inherent part of any investment, and with smart, diversified, long term investing, the risk of investing in the stock market is quite negligible. For instance, since its inception, the stock market has always gone on to reach an all new-time high, despite any market dip or economic event. If you’re invested for the long-term, you should weather the storm of any short-term volatility.
Of course, you should never ignore risk (or count on any investment as an iron-clad certainty), don’t let the risks of the stock market prevent you from trying to reach your financial goals.
Myths in investing #2: My wealth is much safer in cash
Granted, your wealth is physically safe in a vault whilst being used in a savings account. However, the actual value of your wealth does deplete in this instance. The average inflation rate is around 3 percent per year (while most savings accounts offer rates far less than one percent). What this means for you is that your wealth is losing purchasing power year after year.
Myths in investing #3: I should only invest when the stock market is doing well
One of the bases tenents of investing is to buy low and sell high. Unfortunately, many seem to heed the opposite of this advice. It’s a widely spread investing myth that you should jump into the market when it’s doing well; which is the equivalent of “buying high.” The truth is that it’s almost impossible to time the market – you’ll never be ahead of the curve, so your best option is to invest over time with your goals in mind.
Want to learn more about navigating financial myths?
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