Debunking Equity Investment Myths
Since the evolution of equity investment, it has been a common misconception that it is an activity for the rich or budding entrepreneurs. Today, there are so many smaller investment options, something more accessible to the working class. In an attempt to promote more investment, companies are now offering free demat accounts to people who want to invest. The idea behind investing in share markets is all about getting to know the market trends better, researching the trends of investment, the company history, and so on. Myths are usually started by people who have been unsuccessful in investment or who haven’t invested in equity.
Here are a few myths on equity investment debunked:
Stock investments are for the affluent crowd
This is absolutely untrue. There are many companies whose stock prices are available at a lower price. This allows you to start investing in smaller amounts and start your journey in the stock market. Hence to make a start in stock markets, all you need is an investment, the amount is irrelevant. You just need to invest periodically in the stock market and you’re good to go.
Stock markets are for people over 40
There is no doubt that equity has so far being the best performing asset class in terms of returns over a longer period of time. Hence the earlier you start investing the more benefit you can gain from the power of compounding. So it is advisable for everyone even if you are a youth who has just started earning and want to save up for the future, or for newlyweds who plan to save up for their family.
Investing in someone else’s favourite company guarantees the same returns
One of the most common mistakes, more often than not is believing this myth. What works for someone else needn’t necessarily work for you, since the other person may have a completely different credit score, different investment goals, or may just have invested at a different time. Opening an online trading account is your first step towards independent investing.
Greater risk equals greater returns
In some cases, higher risks do yield higher returns, but not always. It does not work that way. Sometimes the risk can be higher because the share market value is low at that period or it’s simply tanking. This would mean the investor loses a greater amount of money by investing long term.
Returns are assured
Interests are variable so they are not always assured. There may be a time where you earn greatly on investments while sometimes you may incur losses. The stock market is continuously fluctuating. What is today’s gain could be tomorrow’s loss, so research and invest wisely.
Before making any investment it is always a wise option to weight out the pros and cons. This will make you a better investor. Remember also to never rely on one source of research. The more you research, the better your investment journey will be.