Top 5 stock market myths that keep people from investing
By Emma Cooper
Equity investments can help you build wealth over time by offering the best returns on inflation. Many people, however, avoid it because of the various stock market myths. We seek to demystify five myths that could prevent you from investing in the stock market and cause you to lose a great opportunity.
Here are 5 myths that keep you from investing
MYTH 1: Stock markets are a gamble
This has become one of the most common stock market misconceptions over time. The majority of investors believe that investing in stocks is equivalent to playing with an opportunity for losses only. But this is not the case. Stock markets generate value since buying shares of an organization is equivalent to owning the company. You are entitled to a share of the company’s profits if you are an investor.
The game, however, does not create value since you do not own any type of property. Also, unlike gambling, the stock market does not have the idea of zero-sum games, in which one player’s winnings are equal to the total losses of all other participants.
MYTH 2: Stock markets require tons of money
Millions of shares are traded every day in the stock market. However, this does not mean that you need to have a large sum of money to start trading. While that might be the case, you can dive into the stock market for just $5.
Note that the price per share of the giant Unilever PLC was around $16.11 in 1990. People who bought 100 shares of the company in 1990 and continued to hold it until today have gained a lot of money. money over those years.
Myth 3: You always lose in the stock market
There is no doubt that stock markets are unstable. However, losses are often suffered by those who invest the wrong way, without understanding the basics, or who panic and exit investment portfolios due to short-term volatility. Investing in the stock market is a completely different game that requires patience and knowledge of the market and its dynamics.
It is also important to stay away from an overly optimistic mindset and avoid timing the market. Accurately timing the market is nearly impossible, and staying invested for the long term is crucial. It is best to seek professional help if you need it.
Myth 4: Rising stock prices will fall
Another common misconception about trading in the market is that if a company is based on sound finances, they are unlikely to assume that their stock price could fall if they trade at a higher price. Thus, before buying shares of a company, it is essential to know more about the company, its management philosophy and others. It’s also important not to buy based on short-term performance.
Myth 5: To invest, you will always need the help of brokers
Inadvertently, if you are a seasoned learner of the markets with the time to follow market fluctuations, you can make your own investments. All you need is a trading account and a demat account. The former allows electronic storage of stocks, while the latter is required for stock trading.
The previously mentioned myths about the stock market need to be dispelled as soon as possible to get the most value.
In summary, investment misconceptions can prevent you from making the best decision. So, don’t let the myths let you down. You’ll learn how to avoid financial advice myths the next time you get a WhatsApp forwarded message!