Read on to learn about the seven most common myths about investing.
Myth #1: Investing is Only for the Rich
One of the most common myths about investing is that you need money to make money.
Nothing could be further from the truth. Rather, it’s more about getting started and having a consistent investment strategy.
There are several investment approaches that allow you to part with small amounts periodically to build sizeable wealth over time.
Numerous fintech companies have rolled out apps and services that allow you to invest with a small amount of capital. Relai, for example, allows you to set up an automated bitcoin savings plan, starting with as little as EUR/CHF 10.
Myth #2: Investing is Very Risky
Most first-time investors are worried about the riskiness of investing, fearing that they will lose all their money because they aren’t experts in the field.
After all, the last thing you want to happen when investing is to lose all your savings. That being said, while investing has no guarantees, you can construct a conservative investment portfolio that ensures that you are not taking more risks than you are comfortable with.
You can lessen the risk of investing through adequate research, a tried-and-tested investment strategy, diversification, and making informed investment decisions.
Myth #3: You Have to Constantly Follow the Markets
The false belief that investing is a full-time job can be discouraging to new investors.
The truth is that investing doesn’t have to involve obsessing over price charts or company balance sheets.
Investing can be made simpler and much less time-consuming by relying on an investment service like a robo-advisor or a savings app or by investing in professionally managed funds.
Myth #4: You Need to Invest at the “Right Time”
When it comes to investing there is nothing like the “right time”.
Of course, timing plays an important role in deciding when to take profit, but this shouldn’t stop you from investing in stocks, bonds, ETFs, or bitcoin because you are waiting for just the right price drop to buy.
You can diversify your portfolio and adopt a long-term approach to counter market volatility. Remember, while some events in markets can be cyclical, it’s difficult to predict market dynamics with any accuracy.
Instead of attempting to time the market, you could adopt dollar-cost averaging (DCA) as an investment strategy, which involves buying an asset at regular intervals regardless of market prices. That way you are buying at an average market price throughout the year and are thus less affected by market volatility.
Using Relai, you can dollar-cost average bitcoin in a completely automated and hands-off manner by setting up a bitcoin savings plan.
Myth #5: You Need to Become an Expert
Investing terminology can be intimidating for first-time investors.
Words like such as order execution, market capitalization, and portfolio diversification don’t make much sense to people that have never dipped their toes into the financial markets before.
Fortunately, you don’t need to become a financial expert or investing nerd to invest successfully in the financial markets. You can use beginner-friendly products and services that allow you to invest small amounts of money on a regular basis in stocks, ETFs, or digital currency.
Relai allows you to auto-invest in bitcoin in weekly or monthly intervals using the app’s automated savings plan feature, starting with as little as EUR/CHF 10. It only takes a few minutes to download the app, set up your bitcoin wallet, and create a recurring bank transfer to start your bitcoin savings plan.
Myth #6: Gold is Always a Good Investment
Another common misconception is that gold is always a good investment.
While it’s true that gold can act as a store of wealth, the precious metal has underwhelmed investors in the last decade.
If you would have bought gold exactly ten years ago (on December 1, 2011), the value of your gold investment would only be up only 2.5 percent today. That means long-term gold holders didn’t even manage to beat inflation.
Since the value of gold dropped quite substantially from a high of $1,892 in 2011 to its ten-year low of $1,237 in 2015, gold’s five-year return looks better, generating a 52 percent return on investment over the five-year period.
In contrast, European stocks – measured by the EURO STOXX 50 Index – have booked a five-year total return of 33 percent in the same five-year period, while bitcoin (BTC) generated a 6,557 percent return in the last five years. Yes, you read that figure correctly.
Myth #7: The Goal is to Become Rich Overnight
If you think investing is going to make you rich overnight, think again.
Regardless of whether you are buying stocks, commodities, ETFs, or bitcoin, investing involves building wealth over time by following your investment plan and continuously adding more funds into your investment portfolio.
While you may pick a stock that shoots up shortly after you buy or see the value of your bitcoin holdings jump by 25 percent in a week, investing is always focused on the medium and long-term.
When it comes to investing, slow and steady wins the race.