We believe investing is a great way to build your wealth and help your money work for you. But buying into misinformation could cause you to make bad choices as an investor.
Here are three investing myths we think you should steer clear of at all costs.
- You shouldn’t start to invest until you have a lot of money
You may be under the impression that you need thousands of dollars to buy stocks or open a brokerage account. This isn’t true. Many accounts don’t impose minimums, so you can invest with as little as $100 if that’s all you have. Some individual stocks may be out of reach if you’re low on funds, but it’s easier than ever to buy fractional shares, which give you the option of buying a piece of a share of stock.
Prior to investing, we recommend you have a solid emergency fund with three to six months’ worth of living expenses tucked away in a savings account. Once you’re all set in that regard, there’s no need to put off investing just because you might feel limited financially.
- You should unload stocks when the market goes down
Your goal as an investor should be to make money. When stock values fluctuate, it’s natural to panic. But if you sell stocks when their value is down, you may guarantee losses in your portfolio. If you sit tight and wait for the stock market to recover—which it has a strong history of doing—then you might not encounter losses at all.
There is one exception—if you have one or two specific stocks in your portfolio that have been doing poorly, it could pay in the long-term to unload them at a loss. Then you can put your freed-up money into stocks with more growth potential. Otherwise, patience pays off, so leave your stocks alone when there is a market turndown.
- It’s impossible to beat the market on your own
There’s a reason so many people pay hefty fees to invest in actively managed mutual funds. Some of those funds do a great job of outperforming the broader market and delivering solid returns. After all, they’re run by professionals who get paid to pick stocks for a living.
But… if your goal is to beat the market, you don’t have to pay someone else to do it for you. With the right strategy and research, you have the potential to beat the market on your own.
You’re more likely to beat the market if you focus on stocks with strong growth potential, assemble a diverse investment mix, and hold your stocks for a long time.
But how do you identify stocks with strong growth potential?
We here at The Motley Fool have you covered. Our flagship investing service, Stock Advisor, provides members with two curated stock picks a month chosen by our founders. These seasoned investors have led members to stocks which have had incredible returns, including:
- Amazon (up 21,252% since our first recommendation in 2002)
- Netflix (up 29,954% since our first recommendation in 2003)
- Nvidia (up 3,865% since our first recommendation in 2017)
But we don’t need to pick-and-choose from their recommendations—their average return is 895%, which is more than 5X the returns of the S&P 500!
But that’s not all.
Click the link and sign up, and you’ll get access to our report, “5 Stocks Under $50” absolutely free. It’s a report detailing 5 of our top stock picks under $50 and it’s our gift to you. Just enter your email address below, and we’ll send it right to your inbox. It’s time to start taking control of your investments.
You don’t need to be a seasoned investor with lots of money to do well in the stock market. You just need to commit to the right strategy and practice the art of keeping a clear head when things go south. Most importantly, don’t believe the above myths. They could stand in the way of meeting your goals and building the wealth you deserve.