So many financial mistakes come from a simple lack of information. To build your knowledge, check out these finance and money myths.
Only 54% of Americans are invested in the U.S stock market, mostly because many don’t know where to begin. Who can blame them? With the number of money myths floating around the internet it can be hard to separate fact from fiction.
Here we will be taking a look at some of the most common money myths and debunking them once and for all so you can invest with confidence.
8 Common Finance and Money Myths
1. Every Market Falls
When shopping around for a good market to invest in, you’re likely to hear the phrase “there is no market that never fails”, however, this is purely a myth. There are some company shares that simply never fall and some partnerships that always turn into a solid profit.
Just because this isn’t the majority, doesn’t mean that you should be made to think it can’t happen. Typically these words come from someone that doesn’t know how to analyze market conditions or has met a fair share of failure themselves
2. The Higher the Grades the Better the Job
This is one finance and earnings myth that starts as early on as High school. We are taught that the better your grades and the higher your performance in an educational system the more money you will earn as you will get a better career.
Fast forward fifteen years and we now see that the majority of industry leaders are college dropouts and self-made start-up tycoons. Today’s market proves that a strong business sense, creativity, and great instincts beat out an honors student award every time.
Related: 50+ Highest Paying Jobs in the World
3. Always Invest in Gold
Gold is often touted to be the “safe and secure” investment, especially during a time of economic downturn. This is because investing in metals means investing in something that cannot be destroyed and will over time become more valuable.
While this may be true in the long term, for the short term this simply isn’t the case. Since the price of gold changes on an almost daily basis, there’s no telling when the best time to buy is or whether or not you’ll make a profit.
4. Foreign Creditors Can Drain the US Treasury
Where would a myth list be without some good old fashion conspiracy? Those who think it’s a poor choice to lend money to the US often support the claim with the idea that if everyone claimed their money at once the U.S Economy would be destroyed, and that there would be no money for returns.
The truth is, there is a continuous flow of foreign loans to the US, and no country currently has the position to impose this dramatic sell order. Making the U.S treasury a pretty safe option.
5. The Dollar Will Be Irrelevant
While the U.S is in a deep debt, just one look into our history books can show us the dollar never reaches a state of complete irrelevance. While other countries like Mexico and Russia have experienced a crash in currency, the dollar has shown evidence of surviving harsh financial conditions.
Which is why the dollar is currently viewed as the “reserve” currency for the rest of the world.
6. Massive Layoffs are Good for Investors
In the early 90’s, layoffs within a business would show a rise in that companies stocks for several weeks, helping to create the myth that massive layoffs were a good sign for investors. Bosses would tighten their belts making it a smart time to buy or hold shares. However, today this trend holds little weight.
Massive layoffs have less to do with increasing profits and more to do with incoming trouble, it could be a sign of stocks crashing rather than rising if a business goes belly up.
7. You MUST Diversify Your Portfolio
“Diversify your portfolio” seems to be a mantra among investors, and for good reason. It makes sense not to hold all of your eggs in one basket, in case the market sees a shift. However, even diversifying your stock portfolio doesn’t ensure you’ll be in the safe zone.
It’s wiser to study past trends when picking where to invest rather than simply spreading stocks out if you’re looking to make smarter investment calls.
Some trends, like energy, are currently rising offering strong returns for investors. You don’t have to be a stock guru to benefit from it, either. Check out Dr. Kent moors scam proof guide to learn the keys to invest in energy.
8. An Almost Perfect Credit Score Will Get You the Best Rates
When it comes to building a healthy financial status we are taught to practically obsess over the magical number known as our “credit score“.
We are told that without the right credit score, we won’t be able to buy a house, a car, or send our kids to school. We’re even taught that the higher the credit score the more we will be rewarded with an almost perfect credit score resulting in the best loan rate.
The truth is, however, at the end of the day bankers still need to make money. So without a large down payment, credit alone won’t be enough to receive a large loan. The same goes for purchasing cars, even 0% car loans only last for a maximum of three years, which will leave you with sky-high payments.
*Bonus* You Should Put Your Money in Real Estate
Real estate is often publicized as a safer investment that somehow behaves differently than other investments. Still, whether its a bubble or whether it’s a boom, history has shown us that real estate isn’t always the most secure investment.
The fact is that the real estate market comes with its fair share of risk. There are still a number of investment opportunities that are more secure and should be considered.
The Pay Off of Doing Your Own Homework?
Any investor can tell you that falling for money myths can be the fastest way to lose an investment. Instead, its best to do your own research when learning about the various aspects of making money.
Then your next step is gathering that information and putting it into a strong financial plan that will make your money work for you.
Author: Cathy Carter