6 common myths about investing in the stock market

Unfortunately, films, media and unscrupulous people in the industry have vitiated and damaged the image of investments and especially of the stock market. In this article I will cover the 6 main myths around the bag, hoping to clarify them.


  1. Investing is difficult and complicated

Many think that to invest you have to be an expert, or that it is so complicated that we cannot do it. Some even believe that this perception has been deliberately created by those who work in the stock market in order to justify its existence and the collection of brokerage commissions.

Actually, the stock market is as simple or as complex as we want. Certainly there are quite complex products, but at the same time there are many instruments quite simple to understand, to buy and sell.



  1. Investing in the stock market is very risky

Many times I have heard friends say: “The stock exchange is like going to a casino”, no less true. Although it is important to know that any investments involve assuming a certain level of risk, it can be controlled and determined by you.

Many investments that we make, outside the stock market, are more risky than many of the strategies that are regularly used to invest in the stock market. In fact, I know of no other tool that allows greater flexibility to manage, diversify and reduce the risk of our investments. 

An example of investments that I consider more risky than investing in the stock market is to put all our money in a single financial institution, in savings accounts and long-term certificates in local currency, something quite common.

Country risk (risk of a crisis in the country’s economy), the risk of inflation, the risk of devaluation of the local currency, the risk of non-diversification (having all the eggs in one basket) far exceeds having a adequate portfolio (combination of different products and investments) in the stock exchange divided in local and foreign currency.




  1. You have to have a lot of money to be able to invest

This is another myth where one hears that investing is only for people with money, and that a large amount is required to be able to do so.

Some of this was true years ago, since many products were not available to individual and small investors like you and me.




  1. You have to be stuck to a computer all day

This is another myth fueled by movies, television series and the media, where they always present the stock market as a means to speculation, where it is only possible to earn money by buying and selling shares, determining when a company’s stock will rise or they will go down

It is important to understand that one thing is speculation and another is investment. If you are looking to invest, it will not be necessary to be stuck in a computer. With good planning and clear objectives you will hardly need to spend a few minutes monthly to color the money you want to invest.



  1. If you know how to do it, you will become rich in a short time

Another great myth, related to the previous one, is that the stock market is a means to get rich in a short time, no less true. As many authors say “easy and fast money does not exist” . Any person selling you the idea that it will make you rich in a short time with the stock market, or any other type of investment or business, is lying to you.

Many believe that they can be smarter and manage to make a lot of money in a short time, regularly these are the ones that feed the myth that the stock market is like a casino, because in the end they end up losing their money. The reality is that this happens through the greed and the high risk assumed, betting (literally) to achieve big profits and get rich easily and quickly. Do not fall into that trap.



  1. My broker watches over my interests

This myth is one of the most dangerous. Many people fearful for their inexperience in the investments request the help of a broker to be able to carry out their transactions, and in the end they think that this person is advising them and will watch over their interests and their money, or else they will prevent them from making mistakes.

Unfortunately this is not the case, I do not say that many do not have good intentions, but even these can be vitiated by only knowing the products they represent, and by those who commission, or simply in other cases they are not able to advise correctly their “customers”.



In this sense, it is important that you investigate on your own and educate yourself on how to invest, and if you have an advisor you should ask specific questions about whether you receive a direct commission for the products offered, as well as what strategy and products uses in their own investments.




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