4 Investment myths to avoid
“Successful investing is about managing risk, not avoiding it.” — Benjamin Graham
MYTH 1: You can only invest if you have a lot of spare money
Of course, having a large sum of money to start with is ideal. But, for most people, this isn’t the case - and that’s okay.
One phrase we hear is ‘you need money to make money’ and while yes, that’s true, you don’t need a lot of money. A reasonable amount set aside regularly can result in a nice nest-egg.
For example, if you put aside P2,000 per month, over 30 years you’d have built up P2,675,000 (assuming an annual net return of 10%).
Another good habit to get into is to increase your savings by the same percentage as any wage increase you get – as soon as you get one. What you haven’t had before, you won’t miss. And it’s an easy way to increase your savings and boost your return over the long term.
MYTH 2: Investing is risky
In investment, risk is volatility – rises and falls in value in the short term. Investing has some risks, but if you’re choosing where and how you invest then you have a say in how much risk you take with your money. Doing that in conjunction with a Financial Planning Professional removes much of the risk.
If you’re investing for retirement, perhaps you’re comfortable taking more volatility, as 30 years gives plenty of time for market ups and downs to iron themselves out.
And perhaps the bigger risk is not investing at all and finding yourself dependent on the charity of others when you are old.
MYTH 3: I don’t have the time
One deterrent to investing is “it takes too much time,” or “I don’t want to have to keep checking my money.” While it’s important to keep tabs on your portfolio, for those starting out once or twice a year is probably enough. Checking investment markets immediately when you wake up everyday is not necessary, or recommended.
If you’re looking for a more hands-off approach, consider using a ‘buy and hold’ strategy, in other words: investing with a long term view. If you are nervous about managing and creating a balanced portfolio, use a Certified Financial Planner professional to assist you.