8 Common Investment Myths Busted!

Common Investment myths

If you are a potential investor or want to diversify your investments, but aren't sure if you should, you have stumbled across the right article. The general mindset for investing in a non-government platform screams, RISK. A lot of investors try to time the market, invest only when the market is high, try to find the auspicious 'mahurat' to invest, and so on. But do all these things matter? In this blog, we will demystify 7 investment myths that concern every potential investor.

8 Investment Myths Demystified

And without further adieu, let's begin.

Myth #1: I am too old to start investing!

If you are in the "I never took a chance when I was younger, I don't want to take a chance anymore" category, then that's probably not the right way to go about things. Yes, it is advisable that you start investing towards the beginning of your career, and the earlier, the better. But that doesn't mean you can't begin your investment career late. You just have to be tactful about which investment platform you're choosing and where you are investing. Today, there are various non-typical investment options that are safer than the stock market and give you comparatively steady returns.

Myth #2: The Stock Market Is the Only Way to Make Money

This is a very common perception among potential investors, but where we do agree that the stock market can give you significant returns when the market is on a high, it is a volatile option and this may not be the way to go if you for example, start investing a few years before your retirement. Also, there is a lot of research that goes into selecting a stock and you will have to garner sound knowledge before you start the process. Luckily, today, there are so many investment options through which one can earn substantial returns. Some avenues like leasing are slowly taking precedence in the Indian market.

Myth #3: Investing Is an Expensive Affair

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This myth probably stems from the fact that some people hire professional financial planners to look over their investment portfolio. But it's not necessary that you must too. Let's put this straight, investing is not rocket science! If you garner basic knowledge about the platform and instrument you are investing in, you do not have to hire a third party to look over your portfolio. Sometimes the platform that you invest with can give you free investment advice as well.

Myth #4: I'm Not Rich

"Investing is a rich man's game". The above is one of the most common assumptions. If you look at history, some of the most successful investors like, Rakesh Jhunjhunwala and George Soros, were not born with a silver spoon. Its imperative to remember that your portfolio grows with every penny. You can start investing with a small capital and grow your financial portfolio from there. The power of compounding helps in this regard. All you need to do is, be smart and grab the right opportunities.

Myth #5: Go Safe, or Go Home

If you still feel that only government-backed instruments are the way to go, then there's a lot for you to read up on! Today, there is a plethora of investment opportunities that are safe and give you decent returns. Granted that instruments like fixed deposits and recurring deposits are extremely low risk, but what about your returns? The current FD rate is 6-7% per annum. However, there are instruments through which you can receive a return of 15% (post-tax) and which are relatively safe as well.

Myth #6: I am too Young to Start Financial Planning

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Let's get this straight. There is no age to start planning for a secured financial future. You can make your money work at any age and with any amount. Of course, you must be wise about where you're investing. If you are a student, for example, you can invest smaller amounts and in safer instruments. But if you are in your early 20s and working, there is no harm in testing the sea and investing in slightly riskier avenues.

Myth #7: Timing Is (NOT) Everything

If you speak to seasoned investors, they will tell you that you should never try to time the market. Most people believe that if they invest when the market is down, they will lose their money. That's the wrong notion, when you choose to diversify your portfolio, market volatility is not something you need to give prime importance to. The economy is structured with its highs and lows and that is inevitable.

Myth #8: Either Invest to Save Tax or Don't Invest at All

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If an instrument gives you an opportunity to save tax, it is definitely a benefit. But that is not the only or most important reason to start investing. Smart investing could be like a second income to you if you do it right. And yes, the government does provide various tax benefits when you invest via government or non-government instruments, to encourage people to invest. Like Section 80 C of the Income Tax act for ELSS mutual funds and tax saver fixed deposits and tax deductions for leasing. Happy Leasing!

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Published on
May 18, 2022
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