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5 Common Beliefs About Investing That Aren’t True

By Ana on August 26, 2016 · Updated September 8, 2021
Investing· Personal Finance

This post may contain affiliate links. Please read my disclosure.

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Investment Myths - 5 Common Beliefs About Investing That Just Aren't True

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.

Investing, Personal Finance

Reader Interactions

Comments

  1. DivHut says

    September 11, 2016 at 9:45 pm

    All good points. The truth is that these days there is zero excuse to not invest. There are so many free trading platforms like Loyal3 and Robinhood that offer zero commission trades and minimum investment amounts of $10. Everyone has $10. That’s a fact. It’s a great way to buy up some solid paying dividend stocks and build up an ever increasing passive income stream bit by bit. Thanks for sharing.

    Reply
    • Ashli says

      September 12, 2016 at 9:10 am

      Exactly! It’s never been easier to get started!

      Reply
  2. Holly Johnson says

    August 29, 2016 at 7:35 am

    I wish people never believed these things. They would be so much better off! Investing isn’t that complicated if you’re lazy investors like us. On top of real estate, we pour all our money into index funds.

    Reply
    • Ashli says

      August 29, 2016 at 10:54 am

      So true – there are so many easy options for investing!

      Reply
  3. DW @GreatPassiveIncomeIdeas says

    August 28, 2016 at 2:54 pm

    The whole “investing is gambling” thing is one myth that always bugs me. Like you said, unlike gambling, investing is owning a piece of a company. Companies and those who manage them have a vested interest in making sure that they company grows. Otherwise, they won’t have jobs! When you invest in large, stable companies, you’re actually doing a small scale version of what many business owners do every day.

    Reply
    • Ashli says

      August 28, 2016 at 8:51 pm

      Exactly! Casinos have a vested interest in gamblers losing money, so the odds are never going to be in your favor!

      Reply
  4. DC @ Young Adult Money says

    August 27, 2016 at 11:58 am

    Investing definitely does not take much time. I think anyone who thinks that is avoiding the reality that you can set up automatic payments to investment accounts that go into pre-chosen index funds. It’s so easy!

    Reply
    • Ashli says

      August 27, 2016 at 3:17 pm

      It really is – it can be almost totally hands-off if you want it to be! I started investing that way, but I found the more I learnt, the more I wanted to learn!

      Reply
  5. Latoya @ Life and A Budget says

    August 26, 2016 at 9:29 am

    I like the point you made about with gambling you still end up with nothing when you lose; however, with investing you still own shares of stock in a company. As long as the company isn’t filing bankruptcy or going under like Enron, you’re pretty much still in the game. This is why I don’t look at my accounts during economic troubles because usually there is a dip and eventually the prices of rise again. If you pull out, you’re missing out!

    Reply
    • Ashli says

      August 26, 2016 at 9:36 am

      Love that – if you pull out, you’re missing out! When the Brexit happened, my investments took a bit of a nosedive. However, I let them be, and they’ve already made back everything they lost, and then some.

      Reply

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Hi, I’m Ana and I am a huge personal finance nerd. In addition to my journey to financial freedom, I also love to live life to the fullest…you know like a millionaire!! Learn more about me and this site…

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