04 Jul 5 myths about investing holding you back from financial success
Time to burst those myths!
Myth 1. You need bucket loads of money to start
I did an Instagram live session and a Facebook live session on investing for beginners, in this session, I showed how easy it is to start investing. Investing doesn’t have to be intimidating or scary and you certainly don’t need tons of money to start. You can start small and build up from there. The easiest way to do this is through Unit Trusts, Exchange Traded Funds and Tax-Free Savings accounts. #Juststart!
Myth 2. Past performance is an indicator of future returns
In this sessions, we went through a fund fact sheet, this gives you information on the fund (let’s take an example of a Global Property Fund) i.e. the risk profile of the fund, whether the fund is conservative,moderate or aggressive; it shows the cost implication to your investment and it also gives you past returns, normally 1 year, 3 years or 5 years. The mistake that most people do or most financial advisers or wealth advisers do, is they show you good past returns as the basis of what you the investor, can expect. This is not true. Market and economic situations change all the time. You should go for a specific fund based on your goals, time horizon and risk appetite.
Myth 3. Timing the market
A few weeks ago, I got an email from one of my clients asking me about an investment opportunity they had heard of (believe me, I get this alot). For some reason, people tend to think investing is much like gambling ( another myth) but it’s not; George Soros, one of the most successful investors in the world says “If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” I think George Soros is talking about the fact that any good company’s stock grows over time, through good and sound management. I do admit, there are ‘lucky’ people you sometimes hear of, after having picked the right stock, they become overnight millionaires…but rarely that happens, take the example of SAB Miller, when they merged in a $100 billion deal with AB InBev, some existing shareholders were bought out and they got a lot for their money. Did it happen over-night, No! It was because they held the shares in what they considered to be a good company for the long-term. So, don’t time the market, it probably won’t work in your favour!
Myth 4. Investing is hard to understand
Think of yourself when you were first learning the ins and out of your current job, you definitely did not start as an expert, perhaps you aren’t one yet; but you sure are more confident than you were on your first day. This is much like investing. You have to learn the basics, do them and continue learning, even bringing in other experts to educate you so you can learn faster. Do not be overwhelmed by the vast information out there. The best way is to learn about one topic and built from there. Again #Juststart!
Myth 5. Life assurance is an investment
You would think this is self-explanatory, but some people confuse risk benefits with investments, there is a clear distinction between the two. Risk, ie life assurance is insuring yourself against the risk of either death, disability, illness etc whereas with investing, it is money you will get to enjoy, either in the form of capital growth, dividends, income or interest earning assets. Insurance is insurance, investing is investing; very different things but equally important.
I hope after reading this, you will realise it’s that easy to start investing and you will just go ahead and do it. Allow yourself to be financially successful!