Investment Myths Debunked
When you invest in financial markets, there is a risk of you burning your money away, but there is also an opportunity for you to earn as well. Most people will say that financial markets like the stock market and the forex market are dangerous because of the risks involved. To a certain extent, this is definitely true. However, it will all depend on your knowledge of how these markets work.
Concerning these markets, here are some investment myths that have been debunked.
1. The Stock Market Is Very Dangerous
Sure, everyone will say that the stock market is dangerous because people lose their money there. Experienced stock market investors will tell you that this is one of the biggest investment myths ever created. One thing to remember about the stock market is that you only incur a loss if you sell your stock at a loss. If you haven’t yet, then it’s just a paper loss.
Most people enter the stock market just by picking any stock and buying it, expecting to earn a short-term profit like they’re in a casino. If you have this mentality, your money will certainly vanish in thin air. The only way to earn well is to strategize like a pro. One of the most profitable strategies would be the Cost Average strategy.
Using this strategy, you will place a fixed amount of money on a chosen blue chip stock. You will then set a target price wherein you will sell your stock once it reaches that price. If you wait for your stock to hit that target price, then you will definitely earn money in the long run.
2. Past Performance Can Determine Future Performance
Most beginners would go into the forex or stock market thinking that the graph can tell them everything. They would usually think that if a currency pair or a stock has done well in the past, then it’ll do well again. Stocks and currencies do not simply move according to past performance. Different factors affect their movements, which you have to study if you want to earn.
3. The Forex Market is only for the Rich
Most people have this notion that the forex market is only for rich people because you can only earn a lot if you put in a lot of money. While putting in a lot of money may help you, you can also earn bit by bit even if you start with a small investment. Don’t be too excited to earn big. Many successful traders started out with a small capital and worked their way up slowly.
These are some of the biggest investment myths out there. It is because of myths like these that many people lose the heart to invest their money in a financial market. Of course, they would be losing out on a lot of opportunities by believing these investments myths. Always remember never to believe everything people say. Do your research and make your decisions based on that.
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