Busting investing myths
Updated: Dec 27, 2021
1. I need a lot of money to start.
Most modern brokerages do not require huge sums of money to deposit in order to start investing in stocks. You can start with as little as $100 and continuously grow your wealth over time.
Use this compound calculator to see how much your money can compound over time if you start investing with just a $100.
2. Only pros can do it.
While it is true that institutional investors have some advantages in form of inside information and access to hundreds of professional market analysts it does not mean that you cannot be successful in the stock market on your own.
You don't have to pay fees to portfolio managers to manage your money for you. Today we have the Internet where we can research any information regarding any company that is traded on any stock market. We can engage in many investing communities on social networking platforms, watch investing content on YouTube and educate ourselves on how to grow our wealth over time safely. Telavivy is also an effort to educate people on investing.
3. The stock market is gambling.
No, it is not.
The stock market can be a casino if you make it one. If you take too much unnecessary risk and engage in day trading, using leverage that you can't afford or using any high-risk tools that you don't understand - there is a high chance you will lose money.
If you buy great productive companies and hold them over a long period of time - it is very likely they will be worth more than they were when you bought them. Buy great, high-quality companies, hold them for a long time and patiently watch your wealth compound over time ignoring short-term volatility.
4. I will lose all my money.
It is very unlikely.
Short-term variations in the stock market may make your portfolio go up or down. But if you have a diversified portfolio and hold on to those investments for the long term, there is a greater possibility for growth over time. Historically the stock market has gone in one direction - up! See the S&P 500* chart below.
If you invested $1000 in S&P 500 index fund right before the 2008 market crash and just held it - you would have turned into more than $3000. The index is up more than 200% as of 2021 even despite the market crash in 2008.
5. I need to watch my investments daily.
Naturally, you will want to track their progress, but you don't have to stare at your portfolio all day. If you buy great quality companies and have high conviction in their success it is better to leave them alone and let them grow over time. If you don't pay attention to short time drops you will be less likely to get shaken off and sell a great company for a loss and then miss out on its future growth. Most investing platforms offer tools to help you keep your investments in check. For example, you can set up share price alerts so your phone shows you a notification whenever a stock climbs above or drops below certain thresholds. Then you can look up what's causing the price movement if it matters to you.
* S&P 500 - The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the performance of 500 large companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices. Wikipedia