If you are scared of investing or you don’t know where to start, fear not, you are not the only one. We have created a complete guide to get you started and how to find the right resources to keep you informed and help you get more comfortable with managing your investment portfolio. If you however feel like there is still something that’s holding you back, read on.
Here are 8 common myths around them debunked.
1. I need to be a pro to start investing
No, to put it simply. With the wealth of resources and tools, everyone can start investing. Of course, the more you invest and educate yourself, the better you get at it, but you need to make mistakes to succeed. Start small and consider investing in things you know about. This could be gaming companies, Tesla, bitcoin, biotechnology, startups – you name it. You will notice how much you know about the industry, what works and performs and what doesn’t and simply based your investments on that. If you want to broaden your portfolio, look at Exchange Traded Funds (ETFs) – A group of diverse assets combined into one portfolio. Each share of an ETF purchases you a piece of every asset in the respective fund. There are now plenty of apps that will help you get started, some of them just launching in the UAE too, like get Baraka and StashAway.
2. I need a lot of money to start investing
You can invest as much or as little as you want. Nowadays, there are a lot of options to get you sta
rted and help you allocate your money, regardless of your budget. The most popular ways to start investing with little to no money include: Investing in a fraction of a share: Fractional shares investing allows you to purchase partial shares of a company or ETF, rather than having to purchase a whole share. This allows you to invest with any amount. Investing using an online manager: An online manager is an investment service company that through using technology and AI assess your investment goals and fit based on few questions. Their goal is to create an investment portfolio for you based on how much risk you are willing to take and can afford. Both of the options have a very attractive offering and can definitely help those who are just starting off.
3. I will lose all my money if I make a mistake
Major events can make the market very volatile. The whole of 2020 has shown how the pandemic has affected markets all around the world and how long the recovery will take. There were some losers during this period, but also a lot of winners. There is always a possibility something unpredictable might happen and might have a negative impact on your investments however if you are investing in a diversified portfolio, the chances are some of your assets might be bringing you big wins. The majority of good investment managers will be able to calculate those risks and can plan your investments accordingly for you.
4. It is not the best time to start investing now
As they say, harness volatility to create opportunity. The markets are ever-changing and while you might be worried about the performance of your portfolio in the face of the unknown a long-term approach is the key and whether it is pandemic, recession or major credit crunch, markets proved to be resilient and always pick up.
5. Investing with make me rich very quick
Hold your horses here. A lot of people got burnt on get rich quick schemes so be very careful with jumping to such conclusions. While some people try to time to the markets the chances are 50/50 that you will get it right. Instead, study the markets and invest with a long-term goal in mind.
6. Stocks that performed well in the past will perform well in the future
While it might seem logical, the fact that a stock or a fund has performed well in the past does not mean it will be performing well in future. Markets cannot be predicted and simple mismanagement can bring any business down. If you want to be successful, think through your approach to investing, study the markets, understand the risks involved and be patient.
7. Investing is like gambling
A lot of people assume investing is like gambling due to the risk involved and uncertainty considering the performance of the stock. While there are many unknowns, unlike gambling, you can make calculated decisions based on your knowledge, research and understanding of all the important indicators.
8. It is best to invest in gold/big names/bonds
There are a lot of assumptions when it comes to where one should invest. Relying on a single asset/stock puts your investment at high risk as you cannot really predict the future. Consider diversifying your portfolio and avoiding putting all your eggs in one basket, to minimise your risk and potential losses.