Refuting Myths New Investors May Believe

23 Mar

Planning for your future is one of the most important financial tasks that you can do. In addition to helping you avoid financial troubles, this is essential for allowing you to successfully plan for retirement. Unfortunately, there are many misconceptions and myths surrounding investing, and if you are under the impression the following two myths are true, you may have a more difficult time making informed choices for your financial planning needs.

Myth: Investing In The Stock Market Always Means Buying Individuals Stocks

There is a common assumption among new investors that the only way to invest in the stock market is to buy individual stocks. Unfortunately, this can involve researching hundreds of stocks before you find one that you feel comfortable purchasing. Fortunately, electronically traded funds are groupings of stocks, bonds and other investments that you can purchase. These funds typically target specific sectors of the economy. As a result, you may be able to find a fund that is composed of mostly of companies from technology, energy, healthcare or any other major sector of the economy. However, it should be noted that each of these funds can have wildly different components, which means you will still need to research the different funds to find one that perfectly matches your investment needs. 

Myth: It Is Too Expensive To Start Investing In Stocks

Sadly, there are many people that may not seriously consider investing in the stock market because they assume that it is too expensive. Often, this fear stems from concerns about brokerage fees and other expenses related to trading stocks. Fortunately, you should be relieved to learn that there are firms that have no commissions on trades and low fees to help their clients be as efficient as possible in their trading. While this can be a great option for those with limited funds to invest, it is important to note that there are often requirements for individuals to qualify for these benefits. For example, there are some brokerages that require accounts to meet certain minimum amount requirements before these fees are waived.

Starting to invest in the stock market can be a great way of putting your money to work for you. However, the decision to make these investments can be rather major, and there are many people that are poorly informed about their options when deciding to invest. Appreciating the facts that you do not have to buy individual stocks and that there are brokerage firms with low fees and commissions will help you to ensure that you are making informed decisions with your investments.

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