The most widespread investment myths
Around the topic of investing, there are many myths and false assumptions that people have on this subject. And it is precisely these myths that we would like to uncover for you today in this blog post.
Myth number 1: Investing is only for gamblers!
Investing is only gambling if you invest your entire capital only in a few individual assets and are not familiar with them. However, if you diversify your capital into different investment classes, the opposite is the case because you earn a lot of money over a more extended period and do not lose it like gambling. If you are interested in diversification, please have a look at this video.
Myth number 2: If you invest money, you have to take care of it all the time
This myth is also not true. For example with shares, there is nowadays the possibility to create a depot at an online broker without much work and time to set up your monthly savings plans and then just let them run without investing much time. Another option is our platform JAVLIS. With a few clicks your investment is setted up and the platform creates a passive income or in other words cash flow for you.
Myth number 3: In a crash, all your money could be lost
This myth is also invalid if you have made the right decision and diversified your portfolio. Your portfolio value will most likely drop but not as much as individual investments, and in the long term, the overall market always goes up, and your money is not lost. Just look at the S&P 500 — it is an index of the 500 leading publicly traded companies in the U.S. The average annualized return since its inception in 1928 is around 8% per year adjusted to inflation. And just think about all the crises that have happened since 1928 like different wars, the dot com bubble or the financial crisis from 2008. Even with these crazy drops the performance over a long period of time is really good. So, invest for the long run and a short term crash doesn’t matter if you zoom out.
Myth number 4: Investing is only worthwhile with very high amounts of money
Wrong! Investing is worthwhile even with small amounts, especially in the long term. An example, let’s say you start investing at age 25 every year $5,500 until you are 65 , meaning less than 500$ per month. At a realistic rate of return of 7% per year, you will have a little over a million dollars at the age of 65. If you start at age 30 you will have $760,000 at 65 and at age 40 only $348,000. This example shows how important it is to start as early as possible and even with smaller amounts.
It is crucial that you only invest money that you do not need for other expenses. Then you will always build up wealth over a longer time.
As you have learned from this blog post, most investment myths are wrong, and investing is an important topic. Crucial is diversification. In a diversified portfolio a cash flow-generating asset should not be left out. With JAVLIS’s help, you can add cash flow-generating holdings to your portfolio with a double digit return per year on your funds.