“An investment in knowledge pays the best interest.” Does this line make sense to you? Well, it will when you realize that Benjamin Franklin’s memorable said it because it was true. Undoubtedly, the more you learn about the stock market, the more you will understand its workings. No matter who your source is for investing in the stock market, it’s always advisable to ensure that you have the appropriate information. Yet, one of the scariest facts that one has to deal with when it comes to investing is avoiding the common mistakes that most people do. Yes, there are common myths and rumors that one can avoid in order to prevent a major loss. We dispel some of the common myths that plague the minds of investors when it comes to investing in the stock market. Myth: #1: It’s almost like gambling when it comes to investing in the stock market Truth: Most investors are ambiguous about the stock market and the concept of gambling; very often the two concepts are used inter-changeably. When punters gamble money there is not denying the amount of risk involved seems similar to the investments in the stock market. Yet, the critical differences lie in the investment itself.
Here’s a short difference between gambling and stock market investing.
Investing in the stock market
Returns are uncertain as there are no specific pattern of returns
Returns are not entirely uncertain as they are dependent on various indices that are based on the performance of the companies listed with the stock exchange
Gambling is based on rumors and random choices.
Most investors in the stock market rely on the performance of the company or the advice of a stock market investor. The choices in investment are not random as they are based on results of various trends of the company.
There are no rules or regulations for the gamblers.
Around the world, stock market investors need to follow certain rules and regulations for investing in the stock market.
Gambling wins or gains result due to the loss of another gambler.
While investors receive their due gains, stock market profits are not directly linked to another company’s loss or fall in the stock market.
So, gambling is not the same as investing in the stock market. The earlier one dispels this rumor that the two are related, making it easier to invest in the stock market.
Myth #2 Successful predictions lead to the success in the stock market
Truth: Foretelling windfall gains in the stock market can be considered similar to foretelling fortunes of a person from a fortune-teller. It is not necessary that foretelling the future of a stock will lead to the successful outcome. Very often, investment advisers share the predictions of the stock market that may or may not lead to the successful outcome in the stock market. One cannot refute the use of fundamental and technical analysis in predicting stock market results, but that does not mean that one is always predicting profitable outcomes.
Myth #3: Only highly-educated and rich people can invest in the stock market
Truth: This is a common misperception that deters several investors from investment in the stock market. The stock market does not specify exclusive entry of individuals with specific qualifications. It’s not a club or an educational institution that requires some mandatory qualifications. Anyone and we mean anyone who has a minimal amount of savings, which they would like to invest in the stock market, can do so. Most of the successful stories in the stock market have begun with the investment of a meager amount of money. Their educational qualifications or bank balance did not matter at the time of investment.