The reason there are so many common myths around the business of mutual funds is that there are few people who know the business right. Common people do not put their brains before investing but consult an expert or a financial executive before doing the business. Therefore, so many myths around this field remain unrevealed.
Here are four of the most common lies or myths that people fall for before investing:
1. To invest, you have to be an expert
This investment myth is one of the most common that people fall for. The experts would make you believe that you are incapable of functioning on your own when it comes to investing your own money. You may need some extra professional advice before going into business, but you do not have to be an expert. You don’t have to know everything about the market. You have to learn only about the parts you are interested in. You can compartmentalize before investing.
2. It is impossible to beat the market
Money investment is all about basic economics knowledge and basic knowledge of how the market works. Well, most of the guys who handle your funds and pension are ignorant of basic skills to beat the market. They fail to do so (96% of them fail for over 5 to 6 years). If he or she knows how to calculate the value of a business, the market could be beaten. The perfect time to buy units is when the big guys are letting go of those because the price is lower.
3. The long term is a safer way to invest
Well, this idea could be a golden trap for those who do not have the basic idea of investment. A long-term investment is way too risky for a real investor. If you do not know the worth of the business that you are holding, you can always diversify to stay away from destroying yourself. However, no great investor has ever diversified. If the company is a corrupt one, your investment plan should be changed. If you hold onto a corrupt company, the long-term is just a recipe for your disaster.
4. Economic forecasts will help
Economics is a complex subject, and the market is full of changing variables. The factors that drive the market of mutual funds are never fixed. Investors often think the opposite. They somehow manage to believe that that they can decide when to invest and where to invest, depending on a macroeconomic factor such as forecasts. The forecasts might give the investors a heads up, but the apprehensions are not definite. This is where your investment manager could help you out to identify the right opportunity to invest money.
The real tip for a good investment is only doing invest in a business that you understand. A successful investment would help you bust these myths around this field.