Myths rule the world. Ok so that’s not entirely true, but they do effect people’s decisions. They may even stop you from making money! This is because the top myths about investments mislead you, keeping people away from the facts that help you in life.
To find out which myths are completely debunked, contact an independent investment adviser Bournemouth or just keeping reading this article!
Myth number 1) You need heaps of money to start
Ok, so this is not true. The whole point of investing is that it brings you money, but you don’t need a lot of cash to start off. If you are a cautious person, or have limited savings you could try;
- Mutual funds
It’s a safe option, funding by shareholders. It’s managed by professionals and deals with diversified holdings.
- Exchange-traded funds (ETFs)
This investment fund is a ‘marketable security’ which will track an index, a bond, or a commodity. It works on the stock exchange, experiencing fluctuations in the price as they are traded. They usually have higher liquidity, and lower fees, when compared to a mutual fund share.
While there are certain options that require an initial investment of £1000 or more, the funds outlined above can be bought with as little as £100. Just remember to try investing in more than one company as it will diversify your portfolio!
We’d also suggest getting the help of an independent investment adviser Bournemouth before making a decision.
Myth number 2) Beating the Market is easy!
Investments are a risk; they are not completely predictable and the stakes can be high if you invest too much. So, don’t think that you can ‘beat the market’. This isn’t Star Trek and you aren’t Captain Kirk. The market is unpredictable, you can’t get one over it and make a huge return!
Vanguard issued a study, countering all the financial firms that say they can make more money for you by beating the market! They compared returns on buy and hold investments, using statistics that spanned over 10 years. Successfully portraying the ‘myth’ in this promise. The Journal of Finance did another study, which reported that the fund managers able to beat the ‘benchmarks’ couldn’t be statistically distinguished from zero!
Myth number 3) Invest in your home, it’s a good idea!
So, let’s clear this up. Owning a house doesn’t make you an investor. A home isn’t an appreciating asset, and the idea that it is has been seriously debunked following the 2008 real estate bubble!
Robert Shiller, a Yale economist, pointed out that the housing market is just barely outpaces inflation. In fact the prices have only grown at a compound rate of 0.3% over the last century, a number which was put forth by the Washington Post and adjusted for inflation.
In the end, what you need to remember is that real life isn’t the movie. Investments are exciting, filled with risks. A solid investment portfolio is pretty boring, but it’s steady and can bring you a steady flow of returns on your money.
You don’t need to be rich and you don’t need to aim to beat the market at its own game. Our advice, contact an independent investment adviser Bournemouth for guidance that’s based on reality and make a decision on where to invest from there!
Here's our last post.