INVESTMENT MYTHS DEBUNKED
You need to be rich
ONCE upon a time this might have been true. But the rise of online investment platforms have made it cheaper and easier to manage your investments. It’s true some investment trusts have large share prices, but this isn’t a concern for most investors.
In practice, almost all platforms offer fractional shares — which means you can purchase a smaller amount. Most platforms will set a minimum amount per investment — typically about £100.
investing is too riskY
WE CAN all recall companies going bankrupt, leaving shareholders high and dry. In practice, though, these events are unlikely to bankrupt the average investor if their money is spread across different assets. Then there’s the risk of market corrections — like we saw in March 2020. Though these will affect your portfolio in the short term, history shows they tend to balance out — as is the case with the Covid crash. No investment is risk free — and you should think about how much you are prepared to risk.
i will get scaMMed
THIS is one of the most common reasons people are put off investing. In fact, a stocks and shares Isa is one of the best ways to protect yourself against scams.
Your Isa provider will be regulated, and will only allow you to invest in legitimate vehicles. That doesn’t mean those assets won’t lose value, but they will be genuine.
You Must be an expert
IT’S true that, in the investing world, a little bit of knowledge goes a long way. But it doesn’t mean you need to know everything. Investment platforms such as AJ Bell will provide lists of ‘best buy’ funds. So-called robo-advisers, such as London-based Nutmeg, invest your money based on your risk appetite. Even so, it’s always worth keeping in mind the golden rule: never invest in anything you don’t understand.
it’s all about luck
WE’VE all heard stories of investors who got lucky and made a fortune. In reality, these stories — if they’re even true — represent the extremes of investing. Most investors aren’t expecting to find the next Microsoft or Facebook. They’re choosing assets which can achieve sensible returns over the long term. That doesn’t require luck. Nor is it hugely difficult to do.
a Fast waY to get rich
UNLIKE other investment myths, this one is different — in that it’s supposedly positive. But it’s as false as the others. For as long as stock markets have existed, fraudsters have claimed to be able to beat the system. Most of these people are lying. Short-term gains aren’t that uncommon in investing. But the only way to seriously grow your money is to play the long game.