Misconceptions of the Stock Market and Why Investing Is a Good Idea

By | August 24, 2015

It’s easy for people to dismiss investing in the stock market as something only the rich do. However, this is just one of the many misconceptions about the stock market in general. Investing in stock is something that people of all income levels can do, and it’s not always the gamble that people think it is.

Misconceptions of the Stock Market

A lot of people think that the stock market is all about luck. A lot of this has to do with a lot of famous stock market investors getting lucky when it comes to choosing which stocks to invest in. The founder and CEO of Delphi Financial Group, Robert Rosenkranz WSJ contributor, said it best. If people were to invest stock based on darts thrown by 1,000 monkeys, 500 people would do better than average. This is because people can get lucky when investing in the stock market. However, this doesn’t mean the best stock investors simply guess where to throw their money. They study the market and learn about the stocks in which they want to invest.

Reasons to Invest in Stocks

Putting money into stock is a great investment no matter how much money a person has to throw down. While it’s true that people stand to make more money when they invest more, even investing a little can result in a profit. Overall, investing is better than saving because the amount of money that you stand to make from investing is more than what you are going to make from a traditional savings account. In either case, the key to growing money is money management. When investing in the stock market, the best way to manage your money is to hire a financial adviser who can help you with the tough choices.

Long-Term Investments

Before investing, it’s best for people to understand that they need to plan for the long term. The market isn’t a good place to simply park some assets for six months and then pull it back out. Due to the unpredictability of the market, it’s best if you plan for the long haul. There will be ups and downs, and it’s possible that you will lose money during the first year that you invest, especially if you buy stocks when they are falling because you can get them at a better price. As such, before investing, use the money you would have invested to pay off any debt. Investing is something that people should do with extra money, not with money that they need.

The Benefits of Investing

The obvious benefit of investing in the stock market is that you have the potential to make your money work for you. If you read the market correctly, you can inherit a nice little nest egg. However, there are other benefits of investing in the stock market that are often overlooked. For example, investing in stocks is a great way for people to expand their financial portfolios. It also helps teach people money management, which is a skill that translates well into any industry. Stock-market investing is also a great way for people to plan for retirement or to plan for a rainy day.