We've had enough of investing myths keeping people out of the game. Let's bust em!
When you think of “myths”, you probably think of werewolves, or dragons, or that Keanu Reeves is immortal and has been kicking around since the 1500’s.
But the investing world is filled with its own collection of myths that are not quite as weird, but equally need to be put to rest.
From the outside, investing seems complicated thanks to complicated jargon, acronyms and its ‘exclusive’ vibe. That’s the point. And they can often benefit from this mismatch in knowledge.
So if you’re fresh to the investing game, you’ll want to make sure you don’t get duped by any of these common investing myths.
Okay, you probably already know this one’s a myth…but you might still kinda believe it.
Younger investors will believe they’re not ready to invest because it’s too much ‘adulting’.
And older investors often believe that it’s too late for them to start.
And, we get it, investing is scary - so it can be easier to put it off or tell yourself it’s too late than to actually dive in.
But if Robert Di Niro can be an intern at a young, hip, fashion start-up in his 70’s, you can do some investing.
The only thing to be aware of is that your investing strategy might change depending on when you start investing, how much time-horizon you have on your investments, and your risk tolerance.
But whether you’re in your teens or your 50s, you can start taking advantage of compounding returns today.
Compounding interest is how you gain more from your investments overtime by reinvesting the profits as opposed to cashing them out.
Start investing at 45 years old
Let’s say you’re 45 years old, and you choose to invest $100 a month till you retire at 65.
If we assume an average rate of return of 9% (the approx average 10 year return on the ASX), you’ll end up with $67,390
Start investing at 25 years old
Compare that to someone who starts at 25 years old, with the same investment amount until they retire at 65
If we assume an average rate of return of 9% (the approx average 10 year return on the ASX), you’ll end up with $471,743
While it’s better to start investing early, there’s no bad time to start.
Investing in movies looks flashy and fast paced, with big screens, heaps of graphs, and a bunch of dudes yelling stuff.
It looks as if investors need to constantly watch the market, talk about money, and never sleep.
In reality, investing is actually pretty slow…and it’s not something that’s supposed to take over your life.
Investors can be hella successful with a set-and-forget mentality around their wealth.
In fact, around 85% of day traders underperform their benchmarks over a multiyear period. You’re more likely to overreact to small changes and miss the underlying trends.
If you’re planning to invest for the long term, checking in on your investments once every 3 months or even once every 6 months can be more than enough.
There’s unfortunately no crystal ball that can predict how a market will ever move.
You might get lucky once or twice by entering the market during a downturn, but it’s impossible to actually predict stock market trends consistently.
And creating wealth through investing is a long game. It’s about zooming out from the short-term ups and downs of stock prices and seeing the bigger pattern.
That will mean having to cop some market downturns along the way, and know that they are a normal part of investing.
When you’ve got a diversified portfolio of stocks that you are holding onto long term, your portfolio overall should continue to grow.
This one probably made sense back in the day when stock markets first came into existence, and access to them was limited to the wealthy. But not anymore!
Now, when you can invest as little as $1, with just a few clicks on your phone.
In fact, getting started earlier with less and investing regularly can help you build investing knowledge and confidence.
Say you’ve got $2,000 set aside for investing, but you’re planning to wait till you’ve got $10,000, and that’s going to take you another two years.
That’s two years of time in the market, and investing experience you’ll be missing out on.
Instead you could invest the $2,000 today and add more in instalments as you go!
Okay so we’ve busted 4 major investing myths. How ready are you feeling about tarting investing?
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