3 Stock Market Myths That Are Holding You Back
If you're like many people, you look at the stock market as a mysterious and complex
undertaking. You know that people earn money on investments, maybe even people like your friends or your family, but to you, it all seems like a foreign language. You may also be put off by the high-risk nature, especially if you're diligent about building your savings.
These concerns are understandable if you've never invested in stocks before. Doing your
homework will help you get up to speed so you can invest in the right stocks with confidence.
Doing a little research on your own will also help you separate fact from fiction when it comes to stocks. The following myths have deterred plenty of people from investing, but knowing the truth ensures you can overcome any obstacles to make your investments work for you.
Myth #1: You Need a Lot of Money to Invest in the Stock Market
If you don't have a huge amount of money to put into the stocks you choose, don't worry. Despite popular sentiment, you can invest using reasonable amounts of money. Got an extra $100 to spare? Use that money to kick off your initial investment by finding a broker that deals in smaller amounts. The advent of online and app investing has allowed ordinary people like yourself to invest in stocks with as much money as they feel comfortable with. That way the risk is relatively low if your stock doesn't perform as well as you initially expect.
Myth #2: The Key to Success Is Choosing the Right Stock
Picking stocks for the first time can be nerve-wracking, but you don't need to be a financial guru to make money on the market. If you're concerned about your selection prowess, look into index funds, which is a portfolio that contains an assortment of stocks or bonds. Index funds are typically more affordable and also considered to be lower risk. This is because you don't have to worry about the performance of anyone stock. Instead, the performance of the portfolio matters, which is a lot less intimidating to people new to the stock market. Index investing is also a lot less time-consuming that picking stocks one at a time. Your time is precious, so look for an investment option that allows you to make smart decisions at a much faster pace.
Myth #3: You Must Sell When the Market Takes a Dive
This is a pretty big newbie mistake when it comes to investing. Logic says that you'll save in the long run by selling a declining stock, but you might also increase your expenses. Consider it like this: you sell your stock when it's on the decline, which ensures that you lose a portion of your hard-earned money. Then you buy back the stock at a later date, when it will likely be far more expensive than when you bought it originally. Try this strategy instead: look for new stocks to buy when the market falters so you can get a fantastic deal on them. When things pick back up again, you'll have recouped your losses and picked up some great stocks at a killer price. You may even end up earning more than you would have normally, which is the entire point of investing.
Virtually anyone can make a buck or two on the stock market when they take the right approach. Like a lot of things, it just takes some common sense. Make decisions reasonably and rationally, and only invest as much as you feel comfortable. These steps are the key to stock market success, even for those new to the process.