Various pranks, false news, and jokes emerged every April Fools’ Day. Well, the sad truth is, even without this annual custom, misinformation is still rampant and can sometimes cause individuals to deflect from an idea already marked with prejudice— hence, the birth of stock market myths and misconceptions.
While many people know facts about the stock market and its potential, a few are still skeptical about investing because of its stereotypes.
Now, it is high time to debunk certain misconceptions about the market. Listed below are some of the stock market myths you should not fall for.
Stock Market Myth 1: Trading equates to gambling
Due to the possibility of gaining tremendous profits through winning trades, many people are led into thinking that engaging in the stock market is a huge gamble – but it is not. Though trading and gambling require a lot of risk, a thick line separates these two.
Trading is equipped with more attachment, analysis, and ownership of earnings and losses. On the other hand, gambling is mainly based on pure luck and speculation.
Notably, there are many factors to consider for each trade, such as timing when to execute, conducting broad market and specific company analysis, being updated on the latest news and trends, as well as thorough research.
Aside from these, investing your earnings in the stock market entitles you to company shares. Meanwhile, gambling gives zero assurance of gaining something after shelling out some money.
Stock Market Myth 2: Only rich people can invest in the stock market
Contrary to what most people believe, stock market investing does not require a huge sum of money to be able to start your stock portfolio. A small initial capital can already go a long way. As you fund and trade with your account, even a tiny amount already has the potential to progress and eventually build your wealth.
Investing is now easier and more inclusive as the stock market has become more accessible to the public. You can even start trading with your mobile phones and a minimum deposit placed under your account. When it comes to trading, knowledge, research, and analysis are more significant factors over the long-term than the amount of money you started with.
Stock Market Myth 3: High risk always equates to a high reward
While it is true that there are high-risk investments that shell out great returns, they are not consistent and do not apply to every stock. The opportunity for big profits exists alongside the probability of big losses.
Great timing, research, market analysis, and a close look at the trends are still valuable and significant, no matter how small or big your investment is.
In a nutshell…
Misconceptions can influence how people think and react to a particular idea. While hearsay may be entertaining to some, it can become crucial when it results in misinformation. It is essential to conduct research and validate the data to prevent hopping on wrong myths and stereotypes.
