Investing myths are plentiful. They’re out there, muddying the investment waters. The truth is that you really can take control of your financial future and you can do it quite well. Here are some of the most common myths surrounding stock market investing.
Investing requires advanced training and college degrees: MYTH.
While formal education is certainly beneficial, the stock market is constantly changing. We’re now able to invest in our own education by using online resources, reading books and doing our own intensive research into the industry and market. It’s not an exclusive club and you’re no less capable than the next person.
You get what you pay for: MYTH.
Financial sales-people would love to have you believe that your rate of return more than pays for the financial advice they provide. Sadly, statistics tend to show differently, no matter how convincing your broker may be. Eliminating the middle man can significantly increase the rate of return for many investors. Just make sure you fully understand what you are paying for and then decide if it is really worth it.
Mutual fund companies have been criticized for high fees without demonstrated performance. Especially once the fees are subtracted, performance isn’t always that impressive….some would even call it dismal. Don’t pay to play if the fund doesn’t perform.
Good Companies Automatically Make For Good Stock: MYTH.
A company may have a great product and a super charismatic CEO, but this says close to nothing about whether or not it’s worth investing in. Sometimes smoke and mirrors do a seamless job and a seemingly hot company may actually have no profitability. They may be covering up a business model that consumes, rather than generates, cash. It is important to always conduct proper analyses and verify the stock’s valuation before buying any stocks, because a good company can sometimes make a good product but a really bad investment.