Investing means many different things to many different people – investment opportunities are varied and have a common perception as something for the financial elites with money to spare and expertise close to hand. Depending on your investment budget and interests there are a range of options but one thing is clear; investing is open to all.
Our team has put together a few of the myths and realities of developing your investment portfolio:
Myth 1- Investing is too risky
Fact1 – Yes of course there is a risk and you may not always make as much as you invested but all investments are scaled on their risk factors. On the one hand we have the extreme end of the spectrum such as hedge betting where the original investment yo-yo’s – you may make a lot or you may also lose a lot but on the other hand we lower risk investments for the new and cautious investor.
Investments may fluctuate but within a more narrow range of markers – a good way to try to make your money work for you, these investments may offer some good yields.
Why take the risk? Well if you take a calculated and affordable risk you may be able to grow your funds.
Myth 2 – You have to be wealthy to begin with
Fact 2 – This may have been true historically but with a much wider range of investment opportunities, it is a lot more accessible these days. Easy to access online fund platforms and investment advisory services means that anyone can now invest with as much or as little as they like!
Myth 3 – You have lock your money away for years
Fact 3 – There is a misconception that your money should be locked away long term investments, or that you should keep it invested for a set number of years. On the whole this is good advice as markets are volatile – the longer investments are held, in theory they should ride any market fluctuations and return some ROI. However, with lower risk investments you can invest for the short to medium term. An adviser can give you advice on appropriate investments and time scales to match your particular needs.
Myth 4 – You need to be an expert to invest
Fact 4 – Investing in single company shares carries an inherent risk but by keeping a close eye in the markets you can place some good investments if you understand what you’re doing. Share investments are dictated by a wide range of factors included global supply and demand, geopolitics, interest rates and the wider economy. Many share dealing platforms will give you helpful share and market analysis as well as weekly, daily, monthly and one year share price ranges.
Another useful option is to invest into a fund(s) – that is essentially a ready made basket of investments that come from low to high risk so you can select the right package for you. Be it an investment in bonds, shares or property there are many risk factored investment opportunities – many banks and private funds will also be able to assist with a package of investments, in any case we recommend taking advice before investing. You don’t need to be an expert; you need to ask an expert!
Myth 5 – You have to regularly monitor your investments
Fact 5 – Whilst it is tempting to obsessively monitor your newly placed shares, a little objectivity is a good thing. If you are new to share investments for example we would recommend that you check the shares at the market open, midday and market close with some alerts setup to notify you of any price drop or spike. It is very difficult to time your selling and buying, so it helps if you have plenty of time to do your research.
An alternative would be a regular investment into a multi-asset fund where you can place an investment and then effectively forget about it – check on now and then of course but it’s a low-maintenance investment tool. What you shouldn’t do is panic at the first sign of loss and sell up; this crystallises any losses you have made and lessens the chance that you can make up the growth again.
Myth 6: You have to know when it’s the right time to buy
Fact 6 – There is a perception that to make money on the markets, you need to buy when stocks are low and sell when they’re high. Investors can spend a lot of time and energy trying to identify when a share price has bottomed out or hit its peak to find the perfect time to buy or sell.
There are many factors that impact an investment and predicting an outcome is all but impossible – the key thing is to invest for as long as you can within your budget – the market will always rule and timing is not the most important consideration. There will always be some downturns but the important thing is to keep your investments (if possible) during the downturn to ride out the negative curve. It’s time in the markets, not timing the markets, that makes the biggest impact on your investment growth.
Myth 7 – It’s a quick way to make money
Fact 7 – This myth is categorically false and many have lost it all chasing the quick buck – investments are and have always been a longer term investment. Investing hasn’t always had the best reputation and with the dotcom and 2008 crash in recent memory and now the coronavirus market tumble – people are right to be extremely cautious about parting with their hard earned money.
That said, investing takes many forms and whilst we should be cautious it can also be rewarding, fun and a positive thing to do – with many different types and form of investing packages available to all budgets. From the novice investor to the experienced market player there is something for us all but taking the right advice is essential!