People who are new to investing commonly make assumptions about the stock markets based on hearsay or “advice” passed down by their elders. Many of these misconceptions may also arise from “scary” anecdotal stories from a friend or family member. This can lead to new investors staying away from stocks due to unwarranted fears.
In light of this, I have decided that now
might be a good time to share nine commolon misconceptions that new investors
may have about the stock market. I have split this into a three-part series.
Misconception 1: The stock
market is like gambling
This is probably one of the greatest myths
of the stock market. Unfortunately, it may also be one of the most widely
believed misconceptions. The stock market may be unpredictable in the short
term. But in the longer term, unlike gambling, it is easy to gauge the overall
direction of the stock market, and that is – up.
Misconception 2: I need to be a
mathematic genius to invest in the stock market
“Investing is not a game where the guy with
the 160 IQ beats the guy with the 130 IQ.” – Warren Buffett
Sometimes new investors may be fooled (with
a small “f”) into thinking that the stock market is only for people who are
champions at mathematics. This can be due to the unending amount of numbers that
we need to take note of or the complicated financial statements that accompany
annual reports.
Misconception 3: I need a lot
of money to invest in the stock market
Another great myth about the
stock market is that only the rich can invest in it. In reality, the stock
market is one of the best ways to invest your money if you only have a limited
capital. This is because the frictional cost of investing in stocks and the
required paid up capital is low compared to other assets.
Soucrce
: fool.sg
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