You would start investing in the stock if you decide to bust the unfounded myths related to investments. Such myths can dissuade young people or new investors who might get scared off and abandon investing due to alleged risk.
When you first start investing, you might come across these myths. They need to be debunked because they give out false insight about trading and investment.
We make sure that our readers know myths are based on ill-conceived knowledge and incorrect understanding of how the share market operates. Don’t let them hold you back from a treasure trove because the legitimacy might encourage you to get started.
Now, let’s take a look at these myths:
Myth No.1: You can invest in Share Markets, only if you are rich
Not at all! You don’t need to be rich to start investing in the stock market. Neither do you have to be a rich businessperson nor do you require a lot of money to get started and continue this journey. Many students, even with their small pocket money, do make money daily!
For example, you can buy 1 share of SBI which will cost you around 450 Rs. You don’t need to be a millionaire to start investing because even a small amount of investment is capable of providing you with a steady profit.
You just have to make sure that you are investing consistently and not give in to myths like this. Start your investments by buying shares with a relatively lower share price. It’s time to start your investments by buying shares that are not that exorbitant. For example, BHEL- PSU shares are available at Rs. 45 per share.
There are many shares in the Indian market that offer stocks at affordable prices. Therefore, you don’t have to save money just for this purpose.
Moreover, a lot of brokers have introduced apps and programs that allow you to start investing with tiny amounts of money and enable you to invest with just pocket money. The internet has made the market much more accessible and Goodwill Wealth Management has launched an app called GIGA that makes trading easy right at your fingertips. We offer the lowest brokerage, making them the best equity trading platform in India. There is no doubt that the tech-savvy youth love this app!
Myth No. 2: Equity Investment is only for youngsters
Who said? Although it is better to invest early on, there is no rule book that says investments are only suitable for youngsters. Anybody can invest as long as they continue to invest to their best knowledge.
If you are a 40-year-old hesitating to invest because you think you are too old, then you are incorrect. Even at 40, you will still be earning for another 20 years. As you age, you can decrease your exposure to equities but you don’t have to avoid them completely.
In fact, one should not totally depend on their savings to secure their future. Savings are important but if you do not invest some of your savings in products that can counter inflation, your wealth will erode over time. Only relying on FDs and savings in your bank account might give you returns lower than the inflation rate, which means you will lose the real value of money.
In reality, Equity Investment is the best way to beat inflation and create wealth for the long term.
Myth No. 3: You cannot invest while having loans
There are times when it is not true! While it is better to have a strong financial base before you invest, and have money ready for the next 5 years so that you can use it for emergencies and family obligations, don’t let it discourage you from investing even if you have multiple loans. You don’t have to settle all your loans before starting your investment journey. Paying back all your loans could take a lot of time during which you lose the potential for financial growth. In fact, you can liquidate your loans faster if you invest in equities properly.
Just make sure you pay back any high-interest loans and you make plans to accommodate both.
Myth No. 4: Only experts can invest
The idea that professionals can only gain success is false. It is simply based on the trading maxim, “Buy Low, Sell High!” You cannot expect professionals to outperform the market all the time and you don’t need to be an expert to invest in equities. No level of experience is mandatory to invest in the stock markets. That being said, it is better to enter the market with some knowledge about your investments and the share market by having a deep understanding of the nuances of the market.
Even when you want to find the best stocks you don’t need to be an expert. All you require is enough knowledge to get started. As you start investing, you can learn and gain more experience so that you know how to navigate better. You will see for yourself that you need not be an expert and just follow the basic thumb rules.
Myth No 5: Returns outweigh the risks
It is always advisable to diversify investments in more than one company share to reduce risk. Beware! Risks and returns are directly proportional!
Once you start investing and deploying risk mitigation tools, you will get a hold of them as you learn more about trading. For example, Nokia was a world leader back in 2007 but within a few years, it was on the verge of collapse. Take advantage of a free online or offline tutorial module offered by Goodwill to learn the art and science of trading!
You cannot ignore risks because the company seems trustworthy and has had a long run or if your family has a history of investing in that company. One example can be Satyam Computers.
You need to factor in the risks. The reality says that investors who assumed the risks have made more money in the equity market because more risks mean more returns! Once you learn to measure and tackle risks, you will certainly earn better returns. Moreover, when you invest with limited money, the risk does matter.
Myth No 6: Collecting stocks on every dip
You might be tempted to buy stocks during dips but buying bad or unstable stocks during dips is not a good idea. Stocks of Yes Bank or Jet Airways are the perfect example of unstable stocks that you should not invest in, even during a dip.
On the other hand, buying high-quality proven stocks during dips is a good move. You must know the difference between quality stock correcting, cyclical stock correcting, and worthless stock crumbling.
Make sure you invest in cyclical stocks when the cycle shows potential for a bounce. Stocks like ICICI Bank Ltd, Mahindra and Mahindra Ltd, Bajaj Auto Ltd have cyclical stocks that you can choose to safely invest in.
Myth No. 7: It’s all about the speculation
Many people might think that investing is too much like gambling. However, that is untrue. Only when you play with volatile stocks, especially when you’re emotionally triggered, it becomes gambling because it involves unnecessary high risks.
That can be avoided when we are investing in equities with a proven track record. You can reduce risks in equity investments through diversification and making investments in stable and profitable stocks. If you can recognize and invest in good and high-quality stocks for the long term, with the intention of creating wealth for yourself, investing is far from gambling.
Today, we busted some myths about investing in equity. We hope this blog encourages young and new investors to start investing and helps investors continue what they started. Good luck! Whether you have little money to invest or lack experience and knowledge about investment, you can still learn and start your investment journey. You can get started with the top equity broker in India, Goodwill Wealth Management, and open a free Demat and Trading Account in under 10 minutes. Call: 044 40205050 or E Mail: customersupport@admin