6 Investment Myths

Did you know that some of the reasons why you're not investing might just be myths?

The reality is anyone can invest; the important thing is patience, dedication, commitment, and not being greedy. s possible.

As such, it's important to dispel certain myths that you may have learned. Here are a few you should be aware of and forget as soon as possible.

1. It Requires A Lot of Money

Many believe investing requires a large capital, so they keep their money safe while waiting for the right time to invest.

Unfortunately, this money is usually kept in a Savings Account and left alone for many years without receiving any return.

Believe it or not, not all investments require a lot of money for us to start. For example, unit trusts such as ASB allow flexibility in the initial and monthly investment, some of which are as low as RM100 per month.

At the same time, this investment platform can still yield better returns/dividends than a Savings Account.

It's good to start with a significant sum of money, but starting small and increasing it over time is better than nothing is better.

2. Investing is Complicated. You Have to Be An Expert to Invest

The opinion that investing requires knowledge is correct. Still, you don't have to wait until you become an expert to start investing.

Do not be overwhelmed with investment jargon or terminology that might be a little bit confusing. Focus on understanding basic investment knowledge, such as risk and return, as it is enough to help you make a wise investment decision.

For a beginner, choose simple and low-risk investments such as ASB and fixed deposits, which are not complicated at all. What is more important is your discipline and commitment to make a long-term commitment to invest.

3. Waiting for High Return

The basic concept of investing is risk and return. Usually, the higher the return, the higher the risk of loss that needs to be borne. Do not wait until you find some extraordinary investment that promises high returns before you decide to start to invest.

Moreover, the investment might be a scam. As such, when some individuals or companies come out promising extraordinary returns in a short time without any risk of loss, you can quickly consider it as a 'get rich quick scheme.'

Besides that, do not be fooled by the sweet promises of online investments that promise sky-high returns with a small investment capital.

In this world, there is no such thing as a shortcut to instant wealth.

To build wealth via legitimate investment, we must work hard, be disciplined and committed, and continuously acquire knowledge to get better returns.

4. It's Too Risky

Investment is not gambling, and as such, it is not about luck and speculation only.

We can not deny that luck sometimes plays an important role. Still, in reality, investing requires analysis, strategy, and making informed decisions based on facts before making any decision.

To be a successful investor, you must carefully build your portfolio, consider all risks, and manage it wisely to get the desired return.

To make investing more manageable, you must diversify your investments, prioritizing low-risk investments to build your emergency fund and slowly advancing to medium and high-risk investments as you get more comfortable.

With proper investment planning, you can avoid losses and build long-term wealth.

5. You are Too Young to Start Investing

Many avoid investing because they feel they are still young. They see investment as something related to retirement, which is so far away.

For them, youth is the time to enjoy life. Why is it necessary to save money to invest when you can only enjoy your youth once?

This assumption is a mistake because those who are still young have an advantage over older people in terms of investment period.

For example, if you invest RM100 from the age of 25, with an average annual dividend of 5%, you will have savings of RM108,384 by the age of 60, compared to only RM57,272 if you started investing at the age of 35.

The power of compounding or interest over interest will make your capital grow more significant over time as long as the capital and dividends are not withdrawn. With a longer investment period, your money will be compounded more frequently, resulting in a more enormous accumulated fund.

The fund can be used as an emergency fund or to fund your dream such as marriage, car deposit, first house, etc. So don't waste your youth; start investing from the very first salary to enjoy the magic compounding interest.

6. Have to Spend A Lot of Time

Many people think investing requires allocating a lot of time as they need to continuously monitor their investments.

This might be true when you are a full-time investor or a trader. However, if your focus is to get passive income, there is no need for you to continuously monitor your investment at all times.

For example, suppose you invest in the stock market or unit trust. In that case, you can adopt the dollar cost averaging (DCA) method or ringgit cost averaging to avoid being too exposed to stock market movements.

Through the DCA method, you will invest regularly and automatically with the same monthly amount. As such, you don't have to worry about your investment consistently, as you have already set a long-term position for a calmer investment.

Are You Ready?

With these 6 myths being busted in this article, we hope you are ready to start investing as soon as possible. It would be best to remember that it is not about attempting to time the market but focusing on quality and long-term investment strategy.

There are 2 main reasons you need to invest: growing your capital and protecting it from depreciating in value because of inflation.

Do not let your misguided beliefs prevent you from investing and enjoying the miracle of compounding interest.