7 min read I Date: 8 April 2022
Most people have a vague idea of how investing works, its long-term benefits and are aware that it is one of the best avenues for achieving financial freedom. Nonetheless, they may be reluctant when it comes to investing for themselves. This is understandable as misconceptions about investing are common. You may have even believed such myths to be true, owing to the lack of exposure and education on investments. In this article, we shed light on 5 common investment myths that prevent individuals from taking their first step towards growing their wealth.
Myth 1 - You must have a lot of money
One of the biggest and most common investment myth is that you must have a lot of money to do so. It is true that in any kind of investment, money makes money. This means you have to put in a sum of money for it to grow, but it does not have to be much. In reality, anyone, regardless of their income or background can benefit from investing with the right knowledge, platform, and strategy. It takes only a small percentage of your current income to start investing. By doing so, you are creating the opportunity for potential returns in the future.
Myth 2 - You must have a deep knowledge of market updates
Another aspect of investing that intimidates people is that its performance is highly dependent on market conditions. Individuals who aren’t up to date with the world or national economy, or lack the understanding of how it impacts profitability, may be more hesitant to invest. This is with good reason. You certainly should not blindly invest your money and expect only the best outcome as there are many economic factors at play. The truth is you don’t need to be an expert to be successful in your investments. Reaching out to a financial advisor that can help you evaluate your risk appetite and draw up an investment plan based on your needs is the best and smartest way to get started.
Myth 3 – You are exposed to high risk, so better opt for savings
Many people are stuck with the belief that investing is a high-risk endeavour and that saving the old-fashioned way is a much safer option. While any kind of investment presents an element of risk, some measures can be taken to mitigate them. These days, it is easy to make informed decisions for your investments with plenty of resources and information available online. Knowing your risk factors would be the first step towards identifying your risk appetite. Factors to consider include inflation risk, longevity risk, market risk, interest rate risk and credit risk. This will give you an indication of where your risk appetite should be on a scale somewhere between conservative and aggressive (low risk to high risk). If you still lack the confidence to learn and invest by yourself, working with a Federation of Investment Managers Malaysia (FiMM) certified financial consultant is a smart way to create a sustainable investment plan that can help you reach your financial goals. Our experienced and certified financial consultants are always there to guide you with your investment plan every step of the way.
Myth 4 - You need to check on daily market performance
Another reason people are hesitant to invest is due to the assumption that they need to monitor market performance daily. In reality, many investment plans can suit your ability to commit. Although you can indeed earn profits daily by paying close attention to movements in the market, a less-time consuming way to grow your money would be to opt for long-term investment strategies. In such investments, you can expect to get returns within days, weeks, months or even years, depending on your capacity. All you need are the right skills, knowledge, and guidance. If you want to invest but are on a tight schedule and have absolutely no time to keep up with market trends, you should engage a financial consultant who can assist with your wealth accumulation.
Myth 5 – You are too young to start investing
People have an underlying belief that one must reach a certain level of maturity and income stability before they start investing. In fact, you should start planning your financial future the moment you turn 18. Achieving your financial goals with investments can be a slow and steady process, especially if you are looking to minimise risk throughout and starting early will give you an added advantage. You will gain hands-on experience that will develop your knowledge and understanding of investments and allow you to execute your plan sustainably. Just as with anything else, practice makes progress. To get better at investing, the first thing you have to do is start. While you should take advantage of starting on an investment plan at an early age, there is no such thing as missing the boat when it comes to accumulating your wealth. With proper understanding and strategies like cost dollar averaging, you can start investing at any time, at your own pace, provided you are over the age of 18. In short, investing is for everyone. You don’t need much money or know-how to start investing. All you need is to decide to be in control of your financial future, be willing to learn and be persistent in your investment journey.
What to do next?
Want to begin your investment journey but not sure how? Reach out to us or speak to one of our financial consultants who can help you discover your goals and draw up an investment plan based on your needs.
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