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Don’t Let These Investing Myths Cost You Your Hard-Earned Money

Earning income only from your day job does not really get you far financially. There are lots of bills to pay, mouths to feed and luxuries to enjoy once in a while. If you want to earn more, experts advise that investing can double, even triple your hard-earned money.

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It is wise to know though that investing is no walk in the park. You have to commit to it. You have to exert extra effort and spend a considerable amount of time for your investment to grow. Most importantly, it’s good to know the things that could cost you your savings.

Believing that gold will never go down because money is still printed worldwide

The truth of the matter is that gold has taken a dive in September 2011. Although there is an accelerated demand for printing money, gold’s value has lost a staggering 38 percent. This is because everything that goes up must come down. So if you don’t believe that there is a particular time and place for every single move the market makes, you will lose your money. Aside from that, those people who make the rules in the monetary system always have the power to change things around, including devaluing the dollar.

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Believing that the older you get, the lesser the risk involved

Seasoned investors disagree that age-based investing lowers the risk and that your portfolio can shift between fixed-income, cash and equities based solely on your age. When developing a portfolio structure, you must take three important things into account. Your ability to take risk is important if you plan on investing in target-date funds. Your willingness and need to tolerate risk are based on how much you need to achieve your financial goals.

Believing that it’s best to buy stock in a company that’s getting a lot of hype

Before a company goes public, angel investors, venture capitalists and private equity firms who helped finance the business will have already gotten the most value for their investment. Professor Jay Ritter of University of Florida said that prices may be high on the first day of trading, but after that, IPOs (initial public offerings) are bad investments. Although this isn’t always the case, picking the best IPO can be a tough job.

If you want to make the most of your hard-earned money, you have to be aware of the risks involved. That way, you’ll be able to equip yourself better and succeed in your investment journey.

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