Making investment decisions is always hard for someone who is just starting out. With limited knowledge of financial products, no proper direction as to how to start and how much to put in, always stressing about the interest expectations and possible loss of earnings, and unable to understand complex financial jargons and numbers, the process can become very overwhelming.

Making assumptions about the time, risk factors, expected returns, etc. prevent many to make good investments.

Let’s dispel some myths about investments, so you can make better decisions.

1. Investing in stock is the only option

Need good returns, invest in stocks. That’s the way to go for many. People are unaware of products like debt funds, REITS, NCDs, etc., which also churn out decent returns.

The bigger plan, however, should be to do strategic investments and asset allocations. Investment plan should also depend upon your goals, timelines, and expected cash flows. Only when everything aligns you get your money’s worth!

2. You need to be rich to start investments

Lower salary or savings doesn’t mean you cannot start investing and earning more. With products like SIP one can start investments with as low as Rs. 500/-. The idea is to keep investing, even small amounts, regularly so that over time it can generate a considerable fund.

3. You must know how to time the market

Timing the market is something even experts struggle to do, because the truth is there is no way to predict the market with 100% accuracy. Instead focus on investing early and consistently. Staying invested will help you deal with short-term market fluctuations and earn good returns.

4. Investing is a time consuming activity

With people already busy with family and work, making extra effort for investments seems exhausting. However, investing doesn’t take a lot of time. Yes, if you are doing it on your own, it is prudent to do some research before you start investing. Once you do that, with the advent of so many digital brokering apps, investing in various products will only take a few clicks.

The other option is to contact a financial advisor who does the work on your behalf. An expert can help you invest such that it matches your goals and timelines.

5. Safe investments are the best bet

Wary investors usually prefer products like fixed deposit because they feel they are safer. However, the real return or inflation adjusted return on these products is often not attractive. Fixed Deposits with an average return of only 5% do not generate earning like they used to. Diversification of the portfolio is the best bet for better returns at reduced risk.

CONCLUSION

Financial literacy is the only way to make informed decisions about investments. Reading online or talking to an advisor is a good start towards this. Only if you are educated about investments will you be able to let go of these popular beliefs or myths.