5 common misconceptions that may hinder you from investing
Myths and misconceptions are spreading like wildfire about investing. Friends and acquaintances may have mentioned one or two, and in the end, you may have had a debate with them, or even you may be convinced to agree with them.
Investment is all about being smart. You might track insider trading and follow the market closely. If you are not cautious or mentally awakened, it may be costly. The results may make you put aside investing just because things hit rock-bottom for you. It may lead you to make risky decisions or may slow your investing powers down. If you desire to invest but don’t know what you’re getting yourself into, worry less. Here are common misconceptions about investing you can be conversant with to make the right decision.
1. Making investment decisions based on recent returns
Again, the media would always play their mind games on “wise-foolish” investors. Advertisements you see on what is working well in the stock markets may push one to invest in trending. If real estate is trending, it will drive you to gamble all your finances on it. You have to realize that every asset performs differently, and they follow a particular cycle.
What works today may be subject to failure in months or years to come. If, in any case, you feel like real estate or whatever is trending will work for you, then opt for diversification. Diversification will save you such that if one plan backfires, you will rely on the other.
2. We believe that one can time the market
Time itself is a deterrent excuse for one to start their investment journey. In today’s world, the perception of time, according to people, is believed to be short. Thus, monitoring our investment can prove a bit challenging. Media and information from trading outlets may give you an idea that you can time the market. Well, following unknowingly would be a rat trap.
You can make investments appear as real as possible by merely buying assets and holding them for a duration of time to be used when the demand arises. In turn, it will help you keep an eye on the market fluctuations because you will be able to monitor your holdings regularly.
3. The thought that gold is a safe investment
Most people have this notion running in their minds that investing in something popular is a safe investment. They fail to recognize that investing in brands familiar in the market is limiting the opportunities for oneself.
Gold has a capacity for rewarding capital schemes. However, downturns in the market or changes in regulations will pause it challenging to respond. Back in the days, gold used to be $2000 an ounce. Later, the price dropped to $1200 an ounce. Since gold and other commodities are volatile, it may not turn out to be a safe investment as it is made to look.
4.Investing can be beneficial when you near retirement
It’s human nature to fail to utilize the time we have now. Investing when you are nearing your retirement is a funny circus joke. Between now and retirement, there are a couple of “life happens” situations that are bound to ruin your plans. Several factors, like the cost of living, can change at any time. Life expectancy is also unpredictable. Diseases and untimely death can occur. Your lifestyle may change during this period, and it would be impossible to outlive your CPF funds. Having all these factors in mind, it is wiser to start investing at a younger age for a sure future.
5. You believe getting a new broker is a deal to beat the market
Most of the active portfolios tend to be dwarfs in the market as compared to passive portfolios. The reason for this is that a broker can mismanage your portfolio. Brokers are after their interests and fattening their pockets. At times they tend to overtrade and increase commissions that will go against your goals.
To meet the end goals of your company, hire a financial adviser. You will only need to pay them their dues, and you’ll be sure that none of them will take advantage of your investment decisions. It will also guarantee you increased net worth since there would be no medium of an unprofessional getting in the way of your investment decisions or fall prey to these investing misconceptions.
