Investment Myths Busted

by Tanishka Sai

1. Investing in stocks means gambling: The majority of people think that investing in the stock market is as good as gambling and the 'luck factor' plays a very important role in making money in the stock market. THIS IS THE BIGGEST MYTH and you need to get out of this mentality. When you invest in stocks without following any base of analysis and just with your gut feeling then that would be called gambling. But reading charts and analyzing them to take a call is not gambling. The potential risk should not exceed the expected returns. If a person follows all this then it would not be fair to say that he is gambling. It can be said that investing in the stock market is his business.

2. Stock Market is for Researchers and Institutional Investors: It is a strong feeling among many people that stockbrokers are privileged to have a lot of well-researched information and so can predict the market turns accurately. This is an imprecise premise because market predictions are never entirely accurate and as far data regarding the market is concerned, the internet has opened up a storehouse of information. Individuals are in a better situation as compared to institutional investors who are under constant pressure to turn in profits every quarter. An individual investor can think long term. Short term setbacks are likely to even-out in the long run and thus provide more stability to the investment.

3. A little knowledge is better than none: The proverb "Empty vessel sounds much" is a relevant one in the context of the money market. While it is true that something is better than nothing, half-knowledge can be more detrimental than helpful and so it is always advisable to be thorough about the subject before venturing into the market. If there is a paucity of time and inclination, it is better to opt for an advisor who will ensure that the money is safe and the investment is right.

4. You Need a Large Sum to Get Started: Contrary to popular belief, you don't need a huge cash pile to invest in Mutual Funds. While other avenues of investment like Gold and property require a substantial amount to get started, with Mutual Funds you can start your investment journey with as little as Rs. 500. Small Investments, made consistently, can really add up due to the compounding and give you better returns than any bank's Savings Account.

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