Debunking the 4 Most Common Investment Misconceptions

Once you are financially independent, making an investment plan becomes a priority in life. But, investing is essentially a lifelong process, which means, regardless of the life stage you are in, having the best investment plan for that particular period is crucial. 

Whether your goal is to save up for retirement, your children’s education or buying a home, creating a suitable investment plan can help you achieve it. An advise that you must be used to hearing is that the sooner you begin saving and investing, the better prepared you will be for the future. 

While this holds in most situations, it is normal for people to experience difficulty in finding the best investment plan. A major deterrent is the misconceptions around investment practices that can prevent an individual from saving and investing.  

Hence, if you are planning to optimize the value of your hard-earned money with the best investment plan, it is vital to get rid of any concerns you may have. Let’s debunk some common misconceptions about investment plan so that you can make confident investments: 

Myth 1: You Need to Be a Financial Expert to Invest Your Money

More often than not, people are dissuaded from making an investment plan because of a lack of confidence in financial knowledge. While it is understandable, since the terminologies used in the investment world can be complicated, it does not mean you should completely do away with an investment plan. 

This may be a significant concern, especially for beginner investors, but the truth is that you do not need to be an expert to make an investment plan. Investment instruments such as mutual funds come with fund managers, which can help people who do not understand what is investment well. 

It can make for an ideal investment plan for those who are short on time to stay on top of the investments and understand the particulars. Moreover, taking the professional’s advice can enable you to put your money in funds that align with your financial goals based on the risk profile, backed with research and analysis. 

Myth 2: You Need a Sizeable Sum to Invest

The misconception that you need a substantial amount of money to make an investment plan is far from the truth. When you look for investment tools, you will find a wide variety that is dedicated to catering to diverse financial profiles. You can start an investment plan such as SIP with as little as Rs. 500 per month. 

In the future, you can also increase the amount as your financial goals evolve. An investor can make the best investment plan by utilizing the tools and its flexibility to suit their needs. Therefore, it is in your best interest to begin investing with a comfortable amount, even if it’s from a small surplus in your savings.

The goal of making an investment plan is to be consistent and include systematic saving in your financial habits. This is favourable for creating wealth in the long run, without burdening your income. Over time, you will also gain more knowledge and confidence to invest a more considerable sum, if you wish to do so. 

Myth 3: You Should Not Invest Without Experience

It is quite understandable that investing without experience sounds daunting. When it comes to your hard-earned income, the risk tolerance varies from person to person. Nonetheless, a majority of people dismiss the role of an investment plan in their lives because they feel it requires special financial skills to gain returns. 

This is not the case, especially today, when investment opportunities are abundant for people who wish to start small. So, even if you are a beginner investor and lack experience, you can start your investment journey with small steps if it helps.

Additionally, there is no shortage of information on investment tools, thanks to the insurance industry’s rapid digitalization. The number of internet users is projected to be 829 million by 2021, which means insurance-related information will become more accessible. 

Myth 4: Investment Means High Risks

Another common misconception among people about an investment plan is that it requires you to take massive risks. This is not the case, since multiple types of funds vary in risk-profiles, which can suit different categories of investors. 

While it is true that all investment plans will have a certain degree of risk associated with it, if they are market-linked but, you can choose what works for you. There is no single best investment plan that will be optimum for each person. The choice of the investment plan depends on several personal factors that will ultimately determine its effectiveness. 

When putting together the best investment plan for your future, an essential thing to remember is to be realistic. Assess your current financial situation practically and map future goals, keeping in mind that inflation and living cost will eventually increase. So, it is prudent to eliminate the misconceptions and create a sound investment plan early in life.