Personal Finance Investment Myths

by David Sung

We all know how important it is to invest our money, but it can be a daunting task. There’s a lot of information out there most of which can be complicated. Unfortunately, getting started with investing is made even harder with myths making the rounds. Today we hope to make investing a little easier by dispelling some of the more common myths.

Gold is Golden

Gold is commonly thought of as a foolproof way to invest. While investing in gold does have its benefits, it also has its peaks and valleys just like any other investment. Your portfolio should be balanced and not focused solely on gold. Also, it should be noted that gold accessories and jewelry should not be considered an investment.

A Financial Planner is a Financial Planner

Not all financial planners are alike. Some may not even have all of the same training. That’s why it’s important to know the difference between all of the designations before starting a relationship. A stockbroker is the person who makes trades on behalf of an individual or institution. The frazzled people you envision on the floor of the New York Stock Exchange are stockbrokers.  Stockbrokers are not required to act in your best financial interest, and will typically make any trade you request. Investment Advisors are registered with the Securities Exchange Commission and are required to act in their clients’ best interest. They offer advice about securities such as stocks, bonds, and mutual funds. Financial planners often specialize in areas such as retirement and estate planning. They are not required to have any specialized training, and you should always ask for their credentials before forming a relationship. There are many training programs and exams that they can take to further their abilities.

A Guaranteed Return

As your grandparents always said, “If something is too good to be true, it probably is.” Be wary of anyone offering guaranteed returns or astonishing returns. There is no ‘answer’ to financial planning and certainly no guarantees.  If you are being told your money is making incredible gains after investing, push for more information and details.  The Bernie Madoff scandal isn’t that far behind us, and is living proof that we can be deceived.  Be careful with your money.

You Can’t Do it Yourself

Don’t discount your own learning ability! There are many resources for the novice investor from websites to magazines, even your friends and family. If you are younger or have a small estate, consider jumping off on your own. There are many people that manage their money themselves successfully. If you are committed to learning and staying up to date with trends, you may be able to save yourself even more money.

Don’t be fooled by investment myths or intimidated by financial jargon. If you do your homework and understand where your money is going, or could go, and have the courage to take a risk, then you can make investment decisions. If you’re not yet ready to make investment decisions on your own, hire a professional that you can trust and ask them to help you understand their investment advice. If they are not willing to take the time to explain, then it is time to take your money elsewhere. Remember: The greater the risk, the greater the reward.

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