5 myths about investing in the stock market that are keeping you from building wealth – CNBC
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Between business news sites, personal finance blogs, podcasts, fintech apps and social media, we are constantly inundated with information and opinions that shape the way we feel about our money — and, importantly, how we use it.
One piece of advice we often come across is to put our money in the stock market, but the reality is that making such a move can be intimidating. We know that investing can help us build wealth over the long term, yet there is risk involved. Not to mention, it’s hard to decipher what’s true and what’s not about the markets from everything we hear and read.
To help out, Select spoke with two investing gurus about the common market misconceptions they hear, so we can dispel the myths and make sure your money is working for you.
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Myth 1: Investing in the stock market is like gambling
On the surface, it’s easy to see how people would relate investing in the market to gambling. The latest meme stock trend has shown how quickly investors can amass (and lose) crazy wealth overnight. Erin Lowry, author of “Broke Millennial Talks Money” and “Broke Millennial Takes On Investing,” has even acknowledged that investing just for the thrill of it can be more akin to gambling.
There are some similarities between the two, admits Jeff Tsai, co-founder of JAVLIN Invest, a new app that helps investors gauge the volatility of the stocks they hold in their portfolio.
“Both involve risking capital without knowing for certain if you’ll get a return,” Tsai explains. “But perhaps the biggest difference between investing and gambling is that over the long run, time is in favor of the investor whereas with gambling, time would be in favor of the casino.”
Patrick McGinnis, a CFA, CFP and partner at wealth management firm Moneta Group, agrees that investing is a long-term game where the investor most likely benefits from sticking it out over time.
“In gambling, somebody wins and another person loses,” McGinnis says. “Investing is to make a profit, and that profit is distributed to shareholders, making it a long-term way of gaining wealth versus short-term speculation.”
And with investing, it’s not a bad idea to …….