Don’t Let the Myth-Makers Keep You Out of Investing
As you push forward to invest your financial resources and build your family’s economic security and sustainability, aimless naysayers will drift across your path. Many will bemoan cursed myths that they have chosen on their own unplanned, mysterious financial pathway, calling to you and even impeding your momentum toward your own sustainable, responsible financial future.
Beware the myths that can keep you away from your goals. Here are five common investing myths and the Myth-Buster realities:
1. Successful investors have had years of expensive financial education or were born wealthy.
Before you go to work on a typical day, you may cross paths with the financial riches of any number of extremely wealthy people who were neither born rich nor formally educated in finances before achieving their investment success. For example, if you wash, gel, or tame your hair in the morning, you may have used one of John Paul DeJoria’s hair care products from John Paul Mitchell Systems. Likewise, the drive-through coffee you have as you head to the office may have come from one of Howard Schultz’ Starbucks stores. If you use an auto, laptop, cell phone, television, or tablet, at least one of them may have involved Bill Gates’ Microsoft products.
Skeptics really have no argument to support the wealth education myth. DeJoria, Schultz, and Gates all came from humble homes, and none studied finances early on … just like thousands of others on the same list! A finance education can certainly help an investor reach his or her goals, but it’s certainly not a prerequisite.
2. Your financial adviser’s the only one making any money on your hard earned cash!
You might hear investment myth boasters proclaim that advisers and brokers really make the money in the investing business. Many successful investors do engage the services of an investment adviser or broker, and, those specialists do, indeed, take their share of the profits, but so what?
Forbes contributor, Larry Light, in his article, “How Much Do Advisers Cost?” reports ithat broker-dealers and registered investment advisers charge varied fees, depending upon the nature of their own background and services. He says, “Generally, the more assets you have, the lower the percentage you pay.” All in all, the total cost for an adviser amounts to little when one considers the potential for compounded interest along with tax savings and other loopholes that advisers can provide.
3. I need a lot of money to start investing.
Again, history shows us example after example of rich investors who began with nothing. Today, more than ever, modern investment instruments like futures, options, IRAs, 401Ks, money market accounts, bond funds, ETFs, certificates of deposits (CDs), short-term and long-term bonds, peer-to-peer lending, interest earning checking and savings accounts, and others offer diverse and readily accessible mechanisms to invest.
Online, electronic investment mechanisms, coupled with educational and research tools, has opened the investing world to persons of all income levels. It’s no longer necessary to subscribe to a financial newspaper, have a physical location on an exchange floor, or even have to go to the bank or make a phone call to invest in stocks, bonds, treasury notes, or other investment instruments.
With less than $100, one may open an interest-paying online account, and with only a few thousand, one may invest in instruments, like futures, options, and stocks, that promise better interest rates. In addition, online resources allow one to learn to paper trade such instruments and practice the skills necessary to do so before actually investing your own money.
4. Investing is too risky.
If investing is risky, not investing is even riskier! By not investing, we fail to prepare for the future, leaving the consequential financial burden to our families and even strangers with no vested interest in supporting us through our retirement. That’s much riskier than any investment you can name. What exit strategy does the investment critic have for cash under the mattress when a currency value declines?
What if the stock market crashes!?!? A prepared investor’s portfolio probably does just fine during a crash; successful investors manage their risk and diversify, assuring that a disaster in an instrument won’t tear down their entire investment portfolio.
Of course investment involves risk, as does anything worthwhile. Investing is worth the risk, and the risk is justified by the respective gains.
5. If I invest my money, I’ll never see it again until I’m too old to enjoy it!
With today’s tremendous instrument liquidity, volatility, and overall market dynamics, modern investors frequently liquidate and reinvest funds. This more dynamic, active fund management provides investors ample opportunities to see the fruition of their hard-earned equity blossom in many forms throughout their lifetimes.
The mere activity involved with investment research and social networking can actually add to one’s personal and professional satisfaction associated with the investment process. Investment has become the hobby of the programmer, the dinner of the monthly meet-up, and television programming of the couch potato! Investing is fun; live it!
If you have not already heard these five myths along your investing trail, they surely wait ahead. Dwell not on them, but, rather, see them as challenges. Learn about the investing myth and myth-makers. The work-around soon becomes the fun, and when we have fun doing something that gives us economic stability and security, it no longer feels like work. Happy myth-busting!