Investing in the stock market is not an easy fit, no doubt. However, If you have been saving with a goal of investing, of course, you want your money to be well invested. Are you considering investing in the stock market but holding back because of these myths? Here is a look at why they might be false:
1. Investing in stock is identical to gambling:
Comparing the stock market to gambling could not be further from the truth. While gambling concerns itself with winning or losing by chance, stock market investment is driven by many factors including the market history, the present economic conditions and information about the company you want to invest in. Unlike gambling, these factors are not random and can be studied and predicted to make profitable investments.
Investing is to make a profit, and that profit is distributed to shareholders, making it a long-term way of gaining wealth versus short-term speculation.
2. You must invest a lot of money to make money in the stock market:
This myth stems from the belief that a lot of money is needed to survive the losses that come with making a profit, which isn’t true. The share market offers opportunities for traders with a variety of risk appetites and capital. The key is to recognise the right company shares through research and to develop a strategy to minimise your losses from the beginning.
3. Stocks that have risen will eventually come down:
Although it is false to state that stocks never undergo a correction, the point is that the stock price reflects the company’s status. If you find a great firm run by excellent managers, there is no reason why the stock will not continue to rise.
For instance, over 20 years ago, Berkshire Hathaway’s stock price rose from $7,455 to $17,250 per share over five years.
4. High risk equates to high returns in the stock market:
Certain high-risk investments in the stock market indeed prove favourable to certain traders. However, not all high-risk investments equal high returns all the time. In truth, high-risk investments are just as likely to lose as they are to win. It requires caution, patience and research to find a high-risk investment that you can place your faith and finances in.
5. The stock market is exclusively for experts:
Investing in the share market is not reserved for a select group of people; anyone can participate in the stock market and make the most of its benefits for wealth creation. Investing in the share market requires understanding the market and identifying the right shares.
This is a continuous process of learning that develops over time. The share market favours preparation; therefore, it is open to anyone with a keen interest in the market.
Preparation involves saving for your investments, studying the markets and consulting with professionals.