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Understanding the realm of finance may present difficulties, especially when we hold on to the numerous myths about investments that are encountered.
The financial environment is constantly changing, leading to several financial misconceptions among investors.
It’s time to stop believing in the falsehoods being spread and to explore the wide range of opportunities available in the financial market for investors.
Learn about 8 common misconceptions regarding investments
When we communicate with investors, we frequently inquire about the rationale behind their investment choices.
Most commonly, we come across reasoning that aligns with prevalent and detrimental beliefs and misconceptions about investing.
We aim to correct mistakes in investment decisions by offering guidance on the best choices to make, especially for those with limited funds and poor allocations. Read on to learn more.
The savings booklet is believed to be a risk-free investment.
The savings account may seem risk-free, but there are still some risks involved. If the bank holding your savings goes bankrupt, you can only recover investments up to R$250,000.
Actions are perceived as riskier than bonds.
Many people think that actions pose greater risks than titles, but this is not accurate. It all comes down to how you define “investment risk.”
Actions may be more unpredictable in the short term, which is often perceived as riskier, but they typically result in higher returns in the long term.
Actions ensure greater profitability, undoubtedly. The stock price is expected to fluctuate more than bonds as an asset class.
Stocks experience significantly higher long-term growth compared to investment returns in securities.
Myth: Investing in the stock market is the most effective way to grow your wealth.
Peter Lynch suggested investing in familiar areas to gain an advantage over other investors.
Unfortunately, many investors put their money into areas they have limited knowledge about, often chasing the best-performing assets without understanding the reasons behind their success. Various types of investments offer high profitability opportunities.
International investment is often seen as highly risky, leading many to stick with domestic assets.
It is considered risky to not include international investments in your portfolio in the current global economy. It has been recommended to keep international investments to a maximum of 10-15% of your portfolio, but sticking to this rule may restrict potential returns.
Review your existing portfolio allocation to determine the proportion of your assets that are domestic versus international.
Consider increasing your investment in both established and emerging international companies for long-term gains, but make sure to understand different foreign investment options before applying.
Inflation is often seen as a threat, implying that investing is necessary to generate profits in the financial markets.
Inflation is one of the reasons why some individuals choose not to keep all their money in the bank, as it can erode the value of their savings.
Every time you engage in buying or selling stocks, you are essentially involved in market timing, even if it is not your primary goal. Your decisions influence market movements as it is impossible to perfectly time every investment.
When investing, focus on managing risks and selecting assets rather than trying to time the market.
Money is not part of child support – a common misconception.
Some parents believe money is not important for children, but initial financial experiences significantly influence their future attitudes and behaviors.
By the age of seven, a child’s financial behavior is already established. Teaching children important financial concepts at this stage helps them develop effective money management skills for adulthood.
School education typically covers a variety of subjects, but financial education is often not included in the curriculum.
Children can only rely on parents for financial guidance, as the way parents handle money and financial matters at home can shape children’s financial future.
Parents should teach their children about financial matters by setting examples of saving, investing, and negotiating.
Gold is often believed to be the most secure investment.
Investing in gold is appealing and often recommended as a secure option due to its status as a key asset and a safe haven in the global financial market, often marketed as a hedge against central bank policies.
Gold investment thesis relies on the concept that fiat currencies will depreciate because of currency printing.
Gold, similar to other investment products, serves as a valuable asset for preserving capital and diversifying investment portfolios.
The thesis is inaccurate because most individuals typically invest in stocks and other assets rather than long-term savings in fiduciary currencies.
Adding gold to a stock market portfolio can provide stability, but it does not guarantee a positive return as gold does not generate interest, dividends, or increase in intrinsic value.
You require a significant amount of money to start investing.
Many people use the excuse of not having enough money as a reason to avoid investing. They often picture investors as wealthy individuals on Wall Street with access to millions of dollars.
Anyone is able to invest as many investment firms, like INCO Investments, set minimum requirements.
Investing with INCO is straightforward.
We choose projects carefully.
You can invest in Fixed Income in less than 5 minutes.
At the conclusion of the period, your funds are transferred into your account.
You can start investing using your mobile phone in only 5 minutes without requiring expertise in investments. Simply have at least R$1000 and invest directly in a real business, potentially earning profits alongside major corporations. Discover more information here.
In closing
Investment myths tend to become more popular when they appear to provide straightforward solutions to the complexities of investing, leading to their widespread dissemination.
The investment sector and financial media contribute to the dissemination of investment myths, knowingly or unknowingly. To avoid falling into investment traps and falsehoods, it is advisable to enhance our financial education.
Inco can assist you with this. Successful investing involves identifying actions or assets that are profitable, such as real estate crowdfunding, a type of collective investment.
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