Whether we’re granted a large amount of cash from an inheritance or from a savings account that took years to build, the question next becomes what to do with that money. Most financial advisers will tell you one thing: put it into investments. Decisions involving money are always best to think through, and simply imagining putting your money somewhere it can decrease or increase in value can be scary.
But investments are far more secure than many realize. Popular misconceptions are just that — misconceptions. To clarify some commonly held mistaken beliefs, here are common myths and misconceptions you need to stop believing about investments.
Investments Require a Large Capital
Here’s a completely sensible concern: many people are worried that getting into investing will require them to release a large amount of cash. There are investment options that have a high price point, making them rather inaccessible. But thanks to innovations in the financial market and technology, even micro-investments are feasible. Many seasoned investors suggest starting investing with at least 10% of your income in a chosen field and sticking with it. What many people need to understand is that:
- Starting to invest doesn’t always require a large capital
- You can start with micro-investments
These two points are often overlooked by many who think putting their money into investments is risky. There is a risk, yes, but it’s a calculated risk. And the amount you’re willing to put out should always be an amount you’re comfortable losing.
The Stock Market is the End-All, Be-All
Whenever we think of “investors,” an image of a suit-clad business person looking over the stock options at the stock exchange is often what comes to mind. While the stock market is among the most prolific forms of investing, it’s not the only one. Consider other popular ways of investing:
- Mutual funds and Exchange Traded Funds (ETF)
- Real Estate Investments
- Government Bonds
- Commodities like precious metals, valuable agricultural products, and even livestock
The newest to the fray are cryptocurrencies, which is an entirely different topic on its own but is one worth looking into. There are many options for interested individuals, and all that’s really needed is to look into it and find the most appropriate one for you.
You Need to Start During the Best Time
Another misconception many holds is to invest in the “best time.” By the best time, they usually mean positive market activity. Market prices often dip or rise, depending on the season and multiple outside factors. To active investors, when they put in more investment matters, but for beginners, it’s not ideal.
Investing at an appropriate time isn’t all that wrong or bad, but it sends the wrong message. You can invest at any point in time; the important thing is you’re ready to invest. Your finances need to be intact, your credit has been cleared off, and you have an emergency fund to fall back on. The “best time” to start investing will always be when you’re ready, and that’s something everyone interested in investing should remember.
It’s Going to Take Years Before Getting an ROI
Among the most commonly misunderstood ideas behind the investment is that it takes a long time to get a return on investment. There is some truth to it, however, as holding your money will yield better returns. If you’re looking to get funds from a reliable mortgage broker for a property, perhaps for retirement or to have an alternative living option, it’s obviously best to leave your investment for years to come.
But if you have disposable resources and can manage the time and effort to grow your money actively, you can definitely get a return on investment far earlier. Many factors can affect the rate of your investment’s growth, and holding for years is one of the best ways to ensure an ROI. But it’s not the only way.
The Market’s Volatility Makes It Unreliable
Stocks and other forms of investment are known to fluctuate in price and value. Many people see this as a downside, as there isn’t a stable post to rely on. However, its value lies in its volatility. The frequent and sometimes drastic price changes allow for far more intelligent methods of investing. When done cleverly, one can get a considerable ROI in record speed.
But even without having to rely on the fluctuation, the market is “inflating” in a sense that currency is “inflating.” Investment values often increase unless there is a general market shift that affects it. All in all, investments are reliable if you’re intelligent and careful about investing.
There are more misconceptions surrounding investments. There will be more. As more people discover personal finance and learn more, they will develop biases and opinions. But you always have to look into it on your own.