Don’t get swayed by these investment “myths”
Over time, you will run into various suggestions for investing successfully. Yet upon closer inspection, many of these ideas turn out to be “myths” – which could cause you trouble if you treat them as solid advice. Here are five of these myths, along with some reasons for ignoring them:
You can find the next “big thing.” All of us probably wish we could have “gotten in on the ground floor” of Apple or Microsoft or some other tremendously profitable company. And who knows? There may indeed be a similar other business out there, waiting to take
off. But it’s almost impossible for anyone to identify these potential “blockbusters.” There’s really no shortcut to investment success – you need the patience and discipline to invest for the long term, and you need to build a portfolio that’s appropriate for your goals and risk tolerance.
Investors should always seek to “buy low and sell high.” This is actually good advice – or it would be, if were possible to consistently follow it. But how can you know when the market is “high enough” to sell or “low enough” to buy? You can’t – and neither can anyone else. Trying to time the market rarely works. A more appropriate strategy is to invest regularly and to diversify your holdings among stocks, bonds, government securities and other vehicles, based on your goals and risk tolerance. Diversification can help protect you against market downturns that primarily affect just one asset class.
Keep in mind, though, that diversification can’t guarantee profits or protect against all losses.
It’s always smart to buy…
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