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  • Writer's pictureAntonise De Wet

6 Powerful Investing Myths

What factors influence your investment decisions? Do you examine all of the data? Looking for a unique opportunity? Do you know how to time your purchasing and selling decisions?

Surprisingly, most people do not consider all facts or data when making these decisions. They would rather hear a good story.

Perhaps it's not so surprising. A good story can infiltrate our subconscious faster than any facts. This is because studies show that good stories appeal to our emotions and values.

They aid in making sense of the world and can be an effective learning tool at any age.

However, stories are not always a good foundation for investment decisions.." Why?

Because the stories we tell ourselves can obscure the facts.

And if those stories are based on common investing myths, anyone — even the smartest people — can have a much more difficult time making sound investment decisions.

So, what stories might be interfering with your financial decisions?

What investing myths could be deceiving you or holding you back?

Let's find out by looking at some common investing myths, how they can cost you, and what the facts really are.

Investment Myth 1

Cash is always more secure than stocks.

Myth: Markets are volatile, and you will lose money in the long run. Instead of buying stocks, it is better and safer to keep cash and invest in savings.

True or false: Markets fluctuate. However, since 2009, the S&P 500 has averaged annual gains of about 15% (and it has risen more than 70% of the time over the last century). 4 If you keep your savings in cash, your growth will not necessarily keep up with inflation. Savings may lose value over time, whereas stock investments have far more potential to grow, earn, and work harder for you.

Investment Myth 2

Before I invest, I need $X.

Myth: I won't consider investing until I have a specific amount of money (only wealthy people can afford to invest).

Fact: If you want to start investing or building wealth for the future, you don't have to meet any financial requirements. There are numerous opportunities and flexible options to meet a variety of needs and goals.

Investment Myth 3

Myth: Investing in the Market Is Like Gambling: The market is like a casino, and investing means I'm just blindly "betting" on "winners" — and I could lose it all at any time.

Fact: Although investing always involves some risk, risk can be managed and dialed in based on your risk tolerance. Gambling is a fast-paced, zero-sum game with lots of action, and the house usually wins. Creating an investment strategy based on your goals and personal circumstances is much more similar to farming.

Investment Myth 4

I do not have the time to invest.

Myth: Investing takes a long time. I don't have time to read reports or look at stock screens. And I don't have time to trade stocks on an hourly, daily, or weekly basis.

Fact: You don't have to set aside a lot of time to invest and build your portfolio. Working with a professional entails receiving assistance, direction, and the benefit of experience and professional tools.

Investment Myth 5

When the market is in distress, it is time to SELL.

Myth: If stocks fall, it's time to get out as soon as possible. Don't hang around and see what happens. RUN and cut your losses.

Fact: This is one of the most expensive myths because panic selling can be a costly mistake. In fact, if your long-term goals haven't changed, abandoning investments and selling as soon as the market falls may be the worst thing you can do. This is because you risk missing out on the recovery, and you may take too long to return to the markets after you've exited.

Investment Myth 6

 If I Could Only Pick the "Right" Stock...

Myth: There are "winners" out there, and all I have to do is pick the "right" stock to do well in the markets.

Making millions on a single stock pick makes for a great movie, but it has little to do with reality. To build wealth, you don't have to cherry-pick stocks and look for the dark horse or unicorn. Instead, put time, consistency, and a solid investing strategy to work for you. FINANCIAL LESSON

Break Through These Harmful Myths

Did any of the information surprise you?

We can all fall victim to an investment myth at some point in our lives.

They can be extremely persuasive, especially if they align with our values and beliefs.

When this occurs, we can use myths to draw on our own experiences and make connections. It's one of the ways we attempt to make sense of things.

However, investing myths can be extremely deceptive.

They have the ability to deceive us into making decisions that are detrimental to our financial future.

As a result, investing myths are like Siren's Song. They're enticing and deceptive, leading you down a path of choices that lead to unfavorable or even disastrous outcomes.

And this isn't just a risk for the inexperienced or inexperienced in investing.

Any of us, regardless of intelligence, can anchor ourselves to information that we want to be true. And anyone can choose to make decisions based on "rules of thumb," even if they know better.

We're far more willing to do so when we're dealing with uncertainties or difficult decisions. It's entirely natural.

However, it will not provide you with the clarity you require to make better financial decisions.

Sincerely, Paavan Kotini, CEO & Principal Advisor

Kotini & Kotini

(804) 372-8307

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