We all want to make our money work for us, but how many of us actually commit to educating ourselves and taking the first step to invest?
The answer is surprisingly few. Wall Street paints an intimidating picture of the world of finance, prompting us to ask ourselves ‘so where do we start?’ Today, we will dispel the myths surrounding investing and help you distinguish fact from fiction so you can invest with confidence.
Investing is the act of committing money, into financial avenues with the expectation of generating a positive return.
Let’s take a deeper dive into the 3 most common investing myths.
Investing and gambling both involve the act of risk-taking in the hopes of making a profit. However, they’re not the same. Unlike gamblers, investors typically buy assets that they expect will generate a financial return over time - like rent from a property or profit from a business activity. Investments also usually have a positive ‘expected value’ (they go up more often than they go down). There are many ways to reduce risk and improve ones’ chances of earning a greater return over a period of time, e.g., maintaining a diversified portfolio.
As such, educated investment is very different from gambling.
“Over the past 10 years, the S&P/ASX 200 Index has recorded an average total return of 9.3% per year.” - 6 August 2021, ASX
As Warren Buffet wisely once said, “the stock market is designed to transfer money from the active to the patient”.
Historic performance is not indicative of future performance.
Today, there are many ways to start investing with simply a few dollars. In our digitally advanced world, we are blessed with a plethora of valuable information about personal finance, wealth creation and investing. There are plenty of mobile applications and online platforms that offer low cost options and assists a beginner’s investment journey.
For example, Upstreet allows you to earn fractional share rewards as you shop with your favourite eligible brands. It’s a great way to integrate an investing mindset into your daily life.
Shares, equities and the stock market… these are the main catchphrases we hear when we think about investing. However, here’s a list of other investment options:
Overall, the finance world may seem daunting at first glance. However, nobody (not even finance professionals) truly can predict the movements of the stock market. As such, avoid falling into the trap of these common misconceptions.
The information in this website is prepared by ESC Operations Pty Ltd (ACN 635 424 538, AR 1283 677), who is an authorised representative of Cache Investment Management Pty Ltd (ACN 624 306 430 AFSL 514 360) (Cache). Any financial products described in this post will be issued by Melbourne Securities Corporation Limited (ACN160 326 545, AFSL 428 289), as disclosed in the relevant product disclosure statement. All information is general information only and does not take into account your personal circumstances, financial situation or needs. Before making a financial decision, you should read the relevant Product Disclosure Statement and Target Market Determination and consider whether the product is right for you and whether you should obtain advice from a professional financial adviser.