I have a confession to make – I wanted to get started investing long before I actually did. But every time I was about to bite the bullet, random (false!) statements would ring in my head, and I would nix the whole idea of ever having an investment portfolio.
Oh, how I wish I’d gotten started a decade earlier – now I know about the power of compound interest, I’m trying not to kick myself!
Are you like I was? Have you been thinking about investing for a while now, but something has been holding you back? Maybe you’ve heard people saying things like “Investing is only for rich people”, or “You might as well just go to Vegas and play the slot machines.”
Spoiler alert – they’re wrong!
Related – How to invest while paying off debt
5 Myths About Investing, Debunked
1) You Have To Be Rich To Start Investing
For some reason, a myth has been perpetuated that investing is only for the rich. While you do have to have some money to get started, it’s probably not as much as you may think. Betterment, my favorite robo-advisor has no minimum investment and no minimum balance requirements.
2) You Have to Know Everything About the Stock Market to Invest
While it’s important to have a least a basic knowledge of investment terminology, you don’t have to know everything about the stock market to get started. This post I wrote outlines 10 common investment terminologies to help get you on the right track.
3) Investing is Basically Just Gambling
Many skeptics believe that investing is basically the same as gambling, but this is not true for a number of reasons.
- When you buy stocks, you are actually purchasing a share in the ownership of a company. Regardless of whether the value of the company increases or decreases, you still own your share. When you put money in a slot machine and lose, you have nothing.
- When you gamble, the odds are stacked against you – the house has an edge on almost every bet you place. Unlike gambling, when you purchase stocks, it’s not in anyone’s best interest that you lose money – quite the opposite.
4) My Home is The Only Investment I Need
Many homeowners believe that their home is the best investment and the only investment they need. A home can be a good investment, depending on a number of different circumstances. But it shouldn’t be viewed as your primary investment, and certainly not your only investment. Even when you’ve paid off your mortgage you still have to spend thousands of dollars a year on property taxes, home insurance, repairs and maintenance and HOA fees (if applicable). And if the value of your home drastically increases, chances are that the value of other homes in your area has also increased, meaning that you would have to move to a different, and possibly less desirable area to free up any funds.
5) Investing Takes Too Much Time
If you plan on managing your own portfolio, then you’re probably going to need a good chunk of time set aside. However, there is good news – you don’t have to manage your own portfolio if you utilize the services of a robo-advisor.
The robo-advisor that I currently use is Betterment – want to know how many hours a week I spend managing my portfolio? Zero.
If you’d rather get your hands a bit dirty (and learn more about investing in the process) then Motif Investing is a good place to start.
You can start with some of the best stock research websites.