3 Investing Major Myths That Are Getting In The Way of Your Financial Goals

 

Invest in your well-being: In this financial wellness series, we're diving into how to better budget for your physical, mental, and emotional health. Welcome to Wellth Check.

Some myths are harmless—old wives' tales about the best way to get a stain out of a white dress or superstitions about improving your luck. But some myths are more serious—like those that have to do with your health or financial well-being. When it comes to some of the myths about investing, those misconceptions can have consequences for your bottom line.

And as you start to build your financial literacy, rethinking dated ideas about money and investing is a great place to start! Just like you need to rework old habits and stuck patterns within your health journey, you need to do that to improve your financial wellness too. 

Here are common myths about investing that you want to dismiss. 

Investing is too confusing

Once you start your journey with investing, you'll find that it's just as confusing as

any other new endeavor you've undertaken in the past. That's to say: There may be challenges at the start, but once you build your financial literacy, you'll feel much more confident and comfortable. 

Think of it like starting a yoga practice—yes, it may take time to learn the poses at the beginning, but as you learn terms and alignment, the basics get easier. Soon, you'll be able to push yourself into new territories and levels. 

Everyone has to start somewhere, so don't let any fear of being a "beginner" deter you. 

Investing is only for the rich

Anyone can invest. And if you are interested in making this financial move, you don't need to wait.

William Bevins, a certified financial planner with Cypress Capital, says that the decades-old misconception that you have to be rich to invest began when the U.S. was exiting the Depression and money was tight, and it stuck.

What's important is to just do it. "You can start with $50. Once you get going, the benefit of compounding interest will do the rest of the work for you," says Chris Muller, vice president of Money Under 30, an independent personal finance website.

Starting small and dipping your toes in the water is a great way to get comfortable with investing. Think of it like joining a gym: Fitness centers aren't just for those who already have a consistent workout routine, they're also for those who want to get in the practice of movement. And how does one do that? Well, the first step is simply showing up.

And another great thing to keep in mind is that there are plenty of options for investing with a small amount of money. Just like starting a workout routine, there are many options available to you: "There are many investment choices; research what's out there," says CPA Mark Stewart with Step by Step Business. "Your investment will serve as a passive income stream to help you build your wealth."

 

I'm too young or too old to invest

Age is just a number. And no matter what the number is when you start your investment journey, there are smart choices to make that can benefit whatever is happening in our life at that moment.

"If you are in your early 20s or just retired, you may have had people discourage you from investing because 'you are too young' or 'you are too old.' However, age has nothing to do with investing. The earlier you start, the higher the chances of earning more from your investments over time. So, holding out on investing based on age can deter your financial goals. Do not let age dictate your investment decisions," says Tom Koesternen, a chartered financial analyst with The Guaranteed Loans.

 

If you set up a $50 automatic contribution when you're in your 20s, in 50 years that could be over $240,000, (assuming a 7% return during that time), points out Chloe Elise, a certified financial coach and founder of Deeper Than Money. 

You don't want to tap into the myth that if you're close to retirement you should reallocate your portfolio dramatically to safety.

"From an actuarial perspective, most of us will live at least another 10 to 15 years post-retirement. If investors become too safety conscious, they miss out on the growth necessary to maintain their purchasing power. Taking a realistic look at future needs generally dictates keeping a large percentage of the portfolio in growth, even as we age," says Ilene Slatko, founder of DSS Consulting, a financial coaching firm.

The takeaway

Just like subscribing to dated health myths can get in the way of your wellness goals, believing in investing misconceptions can impact your personal finance goals. One of the most important things to overcome is simply thinking investing isn't for you—investing can be a great tool for anyone who is looking to improve their financial well-being. 

 

-mindbodygreen.