Investing is a great way to grow your wealth. There's just one problem -- there's a lot of misinformation out there about what it takes to succeed in the stock market, and if you buy into it, you could end up losing out on far too many lucrative opportunities to count. In fact, here are three investing myths you'll want to steer clear of.
1. You shouldn't invest until you have a lot of money
It takes money to make money, but that doesn't mean you can't start by investing a little bit of money and working your way up from there. Whether you're investing in a brokerage account or retirement plan, you don't need to pump thousands of dollars into the stock market to kick off your investing career. Start off with $100 or $200 if that's all you can swing. There's a host of affordable investments you can buy for very little money, and these days, fractional shares are around to let you invest in more expensive companies as well.
2. You need to own dozens of stocks
You'll often hear that it's important to have a diverse mix of stocks in your portfolio. And that's very true. But it doesn't mean you need to own 57 different stocks to be well-diversified. As a general rule, it's a good idea to aim to own 12 different stocks from a range of market segments. But again, that doesn't need to happen right away -- if you're short on funds, you can buy a couple of stocks and build your portfolio as your finances allow.
3. You need to be an expert -- or hire one -- to do well at investing
When you're relatively new to investing, the idea of choosing your own stocks can be daunting. But it doesn't have to be -- and you certainly don't need to pay for someone else's expertise, either. As you grow more comfortable with the idea of investing, you can slowly but surely hone your stock-vetting skills and understand what metrics to look for. But until you get there, you have options -- namely, you can buy exchange-traded funds (ETFs) instead of individual stocks.
ETFs let you own a bucket of stocks without having to research each one. These funds either aim to match the performance of the broader market, or they focus on specific types of stocks (for example, large companies versus midsize companies versus small companies). You can also buy bonds ETFs -- you're not limited to stocks by any means. The great thing about ETFs is that they're investments you can truly set and forget (though it's always a good idea to check up on your portfolio every so often).
It can be tricky to get over the hump of opening a brokerage account or retirement plan and starting to invest money in it, but the one thing you shouldn't do is buy into these silly myths. All of them could get in your way of accumulating serious wealth in your lifetime.