Investment Myths to be Aware of

Investing is probably the best way for you to get the most out of your money and for you to become wealthy. Everybody wants to invest and everybody recognizes, looks up to, and wants to be like successful investors. However, despite the rewards and potential, so many people would rather stay in the sidelines rather than taking a chance of a lifetime because of some erroneous beliefs and mindset about investing. Here are some very popular myths about investing.

1.) Investing is risky. This is probably the most common reason why people stay away from investing. People think that investing is so risky that the chances of making it a success is so slim. In reality, risk is inevitable and what separated successful investors from average and failures are the knowledge and attitude that they have towards investing. Successful investors know what they are doing. They know everything from the nature of the business to legal matters and even down to the tiniest detail in the business. Successful investors know that knowledge is very important in investing thus they exude a very positive attitude towards knowledge. Average people don’t like school. For them, graduating from college and having a job is enough. In that way, they are making themselves stagnant. Successful investors look at knowledge as a continuous process. They continue to learn and improve their knowledge.

Knowledge minimizes risk. Investments are never risky in nature. What is risky is the level of knowledge the investor has. A very limited knowledge is very dangerous.

2.) More money, better investment. Some people think that the amount of gains, profits, or returns would depend on the amount that you have invested. For these people, the greater the amount, the greater the return. Though there is some truth in that, that hasn’t been always the case. Bill Gates didn’t have a billion dollars when he started Microsoft. Warren Buffet wasn’t a billionaire either when he got Berkshire Hathaway. It doesn’t necessarily take money to make money. In most cases, it takes creativity and appeal. Mark Zuckerberg got the interest of the youth and eventually almost everybody with Facebook. Zuckerberg wasn’t a millionaire either when he started Facebook. It takes imagination, creativity, being innovative, determination, and the right attitude to make money. Having money of course helps but generally, it sometimes isn’t necessary.

Create the need and capture the market sentiment. Once the market realize the importance or relevance of your product or investment, money will follow.

3.) Educational attainment is a barometer of success. I’m always at awe hearing success stories of people who gave up college to start their own businesses and investments and became some of the richest people in the world. There is a very big difference between getting educated and getting a formal education. For some people, formal education is the key to success but in reality, street smarts or getting educated through experience is far better. Most people are still following the outdated mindset of having a degree and finding a job. The world has already evolved and we are now in the Information age. Having a job and working your way up the employment ladders still works but it worked best during the Industrial period. There are far better ways to become a successful investor in this age and sad to say, having a degree is none of them. Of course having a degree helps because it gives you more knowledge and reputation but all in all, it isn’t that necessary.

It’s quite ironic to think that college graduates and even those who graduate with honors work for high school dropouts who established their own companies and investments.

4.) Diversification is always good. We might have heard the line “never put all your eggs in a single basket”. That might hold true in some cases but in some, it doesn’t. The reason of diversification is to minimize the risk by spreading the investments and letting the good ones cover or control the bad ones. In the downside, diversifying means that you are also putting yourself in greater risk in picking the wrong investments. As much as the good ones are made to cover the bad ones, the bad ones on the other hand will prevent the good ones from giving you greater gains thus preventing the fast growth of your investments.

Knowledge is the key in investing. If you know which investments to pick, you are going to have a better rate of success and avoid picking the bad eggs. Diversification may only work if you know what you are doing.

5.) Real estate will never depreciate. Real estate is one of the most popular investments. Real estate properties appreciate fast and they double, triple, or even multiply their value tenfold in just a matter of years. However, as ideal as they are, real estate have downsides in reality. Though the chances of appreciating is good, there are times that their value depreciates as well. Natural calamities, legal claims, and economic unrest are some of the issues that could bring the value of a real estate property down.

Another thing to consider in real estate is the taxes. Real estate taxes are normally heavy and if the property isn’t producing money, it becomes more of a liability rather than an asset and it defeats the purpose of being an investment.

6.) Investing requires a lot of time and effort. Investing doesn’t require a lot of time and effort and in fact, the great thing about investing is that it could give you more time to do something else, either that something for you to enjoy or for you to focus on other investments and earn more. Though it is necessary to really focus on the investment, it doesn’t necessarily mean however that you should put all your attention to it. Whatever investments you have, they will appreciate in time as long as you are making the right decisions and actions for it. Working on the wrong things 24 hours a day for 7 days a week will yield the wrong and failiing results while doing the right things and doing it just for an hour every week will reap great rewards.

Such myths are obstacles towards your investment success. Convince yourself that there is no truth in it and that right knowledge and the right attitude are needed in making an investment successful. Every successful investor have faced challenges along the way but their knowledge and attitude pushed them forward and let them refuse to give in. The path towards investment success is never easy yet the rewards are enormous. Don’t let these myths get the best of you, after all, most of these myths came from unsuccessful people in the world of investing. If you want to succeed, listen to winners and refute such myths.