Some people always feel that stock investing is more like gambling. But that is far from reality. Stock investing involves a lot of research, understanding of the market and foresight. It may seem seem like a gamble but it is a highly calculated and a calibrated one.
There are many other such misconceptions about the myths about investing in stocks that have stuck around in the minds of public for years. This article will trawl through the list of stock market myths and bust them so that your investment decisions are not swayed by misinformation. Here is a quick and helpful guide to help you know how to start investing in stocks.
Myth 1. Investing in the stock market needs a lot of money
Reality: Most people are of the opinion that investing in the stock market is only for the experienced and the rich. However, contrary to popular belief, stock investing can be done with as low as Rs 10. Technically NSE, BSE, etc. do not have any minimum amount for investing.
To know how to start investing in stocks, you don’t need to be wealthy. You can start investing money in stocks by putting into equity investments with a small capital and then reinvesting your earnings. However, it is important that you ensure you are investing in good businesses at a fair price along with a long-term perspective.
Myth 2. Stock investment helps you make money quickly
Reality: Though many people earn via intraday trading, there is no such thing as ‘overnight money’ schemes in the stock market. Equity investments are considered to be ideal for long-term investors. Therefore, keeping your expectations realistic is more important while trading in stock market.
Myth 3. Investing in stocks is all about timing the market
Reality: Timing the market is not an ideal way of investing. Trying to catch crests and troughs of a stock cycle can be quite challenging and, more often than not, you would end up losing more money out of sheer fear.
By timing the market, you are letting fear and greed rule your judgement, which is contrary to the basic stock investing principle.
Instead of trying to “time” the market, it makes more sense to focus on your investment goals. Being invested is more important.
Myth 4. It’s always good to buy ‘hot stocks’
Reality: This is not always true. Hot stocks may not generate enormous gains over the long run. It’s better to analyse the stocks based on the company’s fundamentals and intrinsic share value.
Stocks that are undervalued or value stocks have often outperformed popular growth stocks at many times.
Myth 5. ‘Buy low and sell high’ is always the right strategy for investing in stocks
Reality: Beginners to equity investment think that ‘buy low and sell high’ is the key to investing. But, price alone is not the factor for stock selection. It is important to study the businesses that you are investing in. Having busted stock market myths about investing, you can now know when to buy and when to sell, which is a critical factor that is more important than the price.
To sum up, avoid being influenced by stock market myths about investing and invest rationally keeping in mind your individual goals and risk tolerance. You can also consult professionals and seek their advice to optimize your investment decisions. If you are a novice in the world of stock market investing, it is a good idea to consult expert opinion and advice through a financial expert who can guide you through the process and familiarize you with trading.
Disclaimer: Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.