We’re here to debunk five of the most common investment myths and—hopefully—make you feel a little more comfortable about investing.
Myth #1: You need to be a stock market expert in order to invest
The stock exchange, which is where stocks, bonds and other financial securities are traded, sold and bought, isn’t well understood by the majority of people. Not to mention the surrounding financial jargon doesn’t exactly make things more clear. With terms like shares, stock market indices and dividends, it’s easy to see why people feel lost. But don’t let the granular details about financial markets intimidate you—investing is actually easy to understand and accessible to everyone.
If you want to brush up on your finance lingo, we recommend this article to help get your bearings. You’ll notice eventually that the same terms are actually used over and over, and that it doesn’t take long to grasp the key concepts. In reality, buying stocks or exchange-traded funds (ETF’s) is easy and accessible to everyone (including those with limited budgets!).
Myth #2 : Investing is a man’s world
Unfortunately, we’ve heard this before. This is an antiquated stereotype, and the cliché wolf-of-wall-street-representations of investors don’t help. All too often, the depiction of a banker or investor is a man, even though women are just as interested in the idea of investing as their male counterparts.
There is no such thing as a predisposition to invest. An interest in investing is a question of education and culture, not of gender. For this reason, it’s critical to be well informed. What we do know is that women’s investments are on average 1% higher than men’s. The reason is simple: because of their education, women are often more sensitive to risk, and less quick to make hasty decisions. This type of mindset is actually rewarded when it comes to investing, since investing involves risks of loss of capital.
Myth #3: Investing is for older or retired people
Here’s another investment myth with absolutely no truth to it! Unfortunately, 65% of young people don’t think investing is for them, and 29% of people in this cohort don’t think they have enough money to invest. However, there’s no minimum amount needed to start investing—just one dollar is enough! Whether you are on a limited budget or not, there are several options available to you to help you accumulate money tax-free, such as a tax-free savings account (TFSA). Many employers are offering a variety of tools that should not be left on the table when it comes to boosting your investment. With the Moka app, you can invest quickly and efficiently with no minimum amount required—all you need is your spare change!
The great thing about investing is that it’s a virtuous circle. Unlike saving, it enables you to obtain a return and to grow your capital. It has to be mentioned that a return isn’t necessarily guaranteed, as there is always some risk involved, but it’s still the best way to generate profits. The earlier you start, the more likely you’ll be able to see your money grow, regardless of the initial bet.
Myth #4 : The funds you invest are inaccessible
When it comes to accessing your money, it depends on the medium you choose. Usually, the funds invested can be withdrawn at any time. However, we recommend that you invest your money with a medium and long-term perspective in order to give it time to grow.
Moreover, studies prove that it’s better to just let your investment grow over time, as opposed to withdrawing your money when there’s a dip in the market. In other words, it’s better to let your money work on its own!
Myth #5 : Investing isn’t worth it if you’re young
Many people will tell you that they’re investing for their retirement, or for their future in general. Those “golden years” may seem far away if you’re only 18 or even 30 years old, but investing at a young age is a great idea.
The earlier you invest, the longer the investment horizon (the total length of time that you have said investment). These long-term investments are generally advantageous because they benefit from increasing profitability thanks to compound interest (the interest that gets periodically added on to interest that has already been accrued). By investing small amounts regularly, you’ll slowly grow your capital. Fifteen dollars here and $30 dollars there might not seem like a lot of money now, but the interest it will generate over many years will surprise you!
So, even if you don’t have any specific projects in mind, don’t hesitate to start investing: in a few years, you’ll probably be glad you started!