Many people think personal finance has a wealth of principles and valuable insights. Some are valuable, others are not, and some are entirely wrong. Investing myths and “rules of thumb” can restrict investors at best, and further, they can cause unnecessary losses and hurt your performance.
An investment myth begins with a factual observation. However, it may only hold for a while, or maybe it’s only applicable to specific markets. Anything accepted by the market to some degree will likely be discounted as well. When the market accommodates a belief, it becomes obsolete.
A myth spreads quickly because it is simple and convincing. If it is true, it doesn’t matter how much it is believed. Investment myths are also spread by the financial media and the investment industry, intentionally or unintentionally.
So, to understand investing for what it is, let us debunk these common myths. We’ve got a guide to separating fake news from the real deal.
6 Investment Myths vs. Facts
| Myths | Facts |
| ● Investing is meant for the rich. | ● Anyone can invest in SIP and another investment model without keeping a hefty amount at risk. |
| ● Investment funds have more risk than shares. | ● Diversified investment bonds are safer to invest in. |
| ● Investing in funds is only for the long-term. | ● Only ELSS and close-ended plans have been locked in. |
| ● Investment funds are not suitable for young investors. | ● Getting involved in investment funds early is a good idea. |
| ● SIPs should be made in equity investment funds. | ● All funds can be invested in via SIPs. |
| ● You’re better off taking on debt than equity. | ● Equity serves better as a long-term goal than debt for short-term goals. |
Myth 1: Investing is meant for the rich
Fact: Most people who are not familiar with the investing world believe that this is a myth that prevents them from starting their investing journey. The fact is, you don’t have to be a multi-millionaire to invest. Consistency and starting early are more effective.
There are several ways to invest; none require high minimum amounts.
So, it is possible to start small. Gradually gain confidence in investing. You can connect with https://www.bondexchange.com.au/ for professional assistance.
Myth 2: An investment fund has a higher risk than a share
Fact: Investment funds are generally a safer alternative to buying shares of stock. Investments in mutual funds offer diversification, which makes them safer than individual shares, which put all your eggs in one basket. Mutual funds, for example, invest in 20 different stocks instead of riding all your money on one. This will allow you to determine which investment option is safer.
Myth 3: Investment funds are only suitable for long-term investment
Fact: You can invest in bonds for long-term, short-term, or even medium-term needs, depending on your financial goals and investment objectives. Investment funds are well known for their high returns due to the power of compounding, which works well when investing for the long term. You can pick these funds based on your needs. If you want to invest short- and medium-term, debt funds might be a better option. Equity funds, however, are needed for long-term investments. A fund is best for a long-term investment. A long-term fund will give you multiplied returns.
Myth 4 :Investing at a young age
Fact : The more you invest early, the more likely you will accumulate wealth. There is no “too young” to invest in investment bonds, and the experts are always ready to help, no matter your age, experience, or profession. Also, early investment in these bonds is recommended. Investing for an extended period will give you the advantage of having time on your side when the market experiences a crisis of unprecedented proportions.
Myth 5: SIPs work best with equity investment funds
Fact: SIPs are viable investment options no matter what type of mutual fund you choose. You can invest in any mutual fund with SIPs. Any claim to the contrary is untrue.
Myth 6: Invest in debt rather than equity
Fact: The two funds have many similarities, but comparing them would be unfair, as debt funds survive market fluctuations while equity funds do the opposite. In terms of equity funds, they’re better. It depends on whether you should use debt or equity funds. The first step to deciding which mutual fund is best for you is understanding both funds.
Summary
Now that we have busted every myth about investment funds and presented you with 6 facts about them, what are you still waiting for? Now is the time to invest!
