Myth-busting the most common misconceptions about investing

It’s safe to say that the investment world has somewhat of a chequered past that’s led to an enduring image problem. Investing has been tarnished by several high-profile events in recent years, such as the Madoff scandal and the collapse of the Lehman Brothers bank, which many financial experts blame for the financial crisis of 2008.

But investments aren’t the sole preserve of the super-wealthy or the Jordan Belforts of this world. In fact, when you strip away many of the common myths surrounding investing, what you actually have is a very viable opportunity to grow your wealth.

In this article, Acumen Financial Partnership myth-busts some of the most common misconceptions about investing.

Myth 1 – Investments are just for the wealthy

Once upon a time, this may have been true. However, in recent years, investing has become much more accessible with online fund platforms providing a world of opportunity to everyday investors. Nowadays, you can begin investing with a relatively small amount of capital.

As a general rule of thumb, regular investors should look to set aside around £50 a month or for a lump sum aim for a budget in the region of £500-£1,000. Usefully, most online fund platforms assign minimum investment levels that can serve as a guideline. An investment adviser can also offer valuable guidance.

Myth 2 – You need to be a financial expert

You certainly don’t have to be Warren Buffett to begin investing successfully. Online funds give you an off-the-shelf investment portfolio that often gives you a wide range of assets, including bonds, shares and property.

Known as ‘diversification’, this approach enables you to spread the risk across various different investments. This can help balance out any losses that might occur in the long run. These types of funds are also managed by an expert fund manager who will be best placed to make any adjustments for you.

Myth 3 – Investing is for risk-takers

Make no bones about it, investing does come with some inherent risk. However, there are different levels of risk and your investments can be tailored according to your attitude towards it. If you are the cautious type, you can invest in low-risk investments that don’t typically fluctuate all that much.

On the other hand, if you’re less risk averse, you can find higher-risk investments that can potentially offer greater rewards but come with the caveat of potentially bigger losses too. Whichever end of the spectrum you fall into, there is bound to be the perfect investment for you. However, it’s always worth bearing in mind that with any investments you may not get back what you invest.

Myth 4 – You won’t be able to touch your money

Technically, this simply isn’t true. In actual fact, your money isn’t locked away. There is no mandatory set period for how long you have to keep your investments for. Nor are there penalties for taking your money out of an investment. The bottom line is that you can access your money anytime you like.

However, practically speaking, the longer you keep your money invested, the better your chance of riding the waves of stock market volatility. It’s also a good idea not to rely on your investments as a piggy bank in times of crisis. You’re far better off accruing a healthy level of savings that you can dip into if necessary, so you can keep your investments well alone.

Myth 5 – You need to know when to buy and sell

Much of the media’s portrayal of investors gives us a warped impression that they have some sort of sixth sense for when to buy and sell stocks and shares. In actual fact, with so many complicated factors affecting the stock market, it’s nigh on impossible to make any sort of cast-iron predictions.

Far from needing a crystal ball, what you actually need is patience. Investing as soon and for as long as possible are your surest routes to long-term success. Ask yourself how long you’d like to invest for. For instance, if you’re nearing retirement age, you may want to make more cautious investments over a shorter term. If you have more time to spare, you can afford to be slightly more adventurous with longer-term investments.

Hopefully, having dispelled these myths, you may now see investing as a viable option for you. Acumen Financial Partnership offers comprehensive, independent investment advice and investment planning, including; asset allocation, appropriate investment selection, risk mitigation, inheritance tax mitigation, and educational cost planning for school or university fees.

For more information about our investments and financial planning services, or to speak to one of our financial planners, please contact Acumen today by calling 0151 520 4353 or email us at info@acumenfinancial.co.uk.