Before I delve deeper into the best ways to start investing, I thought I should tackle some of the myths about investing and debunk the most common investment myths. Hopefully, this post will also help convince you it’s a great idea to try it out.
It’s important to note that this does not constitute personal advice and if you’re not sure whether an investment or savings account is right for you please seek professional financial advice.
Before I delve deeper into the best ways to start investing, I thought I should tackle some of the most common misconceptions about investing and hopefully try and convince you it’s a great idea to try it out. Our own emotions and behaviour can often get in the way of investing, but it is possible to overcome this. Ignoring these misconceptions is a great place to start.
I don’t have enough money to invest
You don’t have to have millions to start investing. As a general principal you should only invest as much as you can afford to lose, (but if you invest wisely you shouldn’t end up loosing all your money!) so don’t feel pressured to invest all your savings or the money you need to pay next month’s rent.
However, small sums can be remarkably effective. If you invest it wisely, you should end up with much more later. This is particularly true at the moment when interest rates are so low. Your hard-earnt savings aren’t gaining you much interest at all in your savings accounts, there are much better returns to be found on the stock market.
I don’t have time to keep track of my investments 24/7
This is actually a good thing – you shouldn’t be tracking your investments 24/7. Markets are notoriously volatile and reacting to every movement could actually have a detrimental impact on your portfolio. Thinking that you need to watch the market constantly is one if the biggest investment myths around.
There are also a lot of investment products available that do most of the work for you, many of which have easy-to-use apps and websites, allowing you to check on your investments whenever you like from wherever you like.
I’m too young to start investing
The idea that investing is for the middle aged and elderly is a myth – you’re never too young to start investing.
In fact, the earlier you start investing the more you stand to gain. This is due to compound interest (Albert Einstein’s eighth wonder of the world). The basic principal is the longer you hold investments for, the greater returns you stand to achieve.
Additionally, the earlier you start investing, the longer you have to benefit from the returns and, of course, enjoy them. Investment returns, as well as dividends, can go a long way to helping you achieve your financial goals, whatever they may be.
I don’t know enough to invest
You don’t have to be an expert or have a degree in finance to start investing. There’s a lot of jargon surrounding investing, but don’t be put off – it’s just jargon. While there are complicated parts to it, the basics are pretty simple.
Start with investments you understand whether it’s mutual funds, stocks, or anything else. An investment manager once said to me: “Think about companies you use regularly and consider buying stocks in them. If you’re using them, the chances are so are lots of other people, so they’ll probably do alright.”
There are a lot of online resources available to help educate yourself – I will publish a separate post highlighting some of my favourites next week. If you have significant sums to invest, it may also be worth speaking to a financial adviser.
Of course, this is just a start, but I hope this helped to debunk the most common investment myths. What do you think the most common investing misconceptions are? I’d love to hear your thoughts.