Memphis Invest issued the following announcement on March 1.
Conflicting information about finances can be a source of anxiety and strain on anyone's bank account. When you're trying to invest and plan for retirement, the swath of information out there can cause confusion and costly mistakes. When you're looking for financial and investing wisdom, it's important to discern fact from fiction.
We're here to debunk more investing myths so that you save money, headache, and hassle on your road to financial freedom.
Debunking 5 More Investing Myths
Myth: You can always trust a professional with your money.
Truth: Due diligence and independence lead to success.
We all want to be able to trust the professionals we work with to handle our money well. Whether these are CPAs handling your taxes, financial and portfolio managers, investment firms, or any other professional who handles your money, you can't afford to take any of them at face value. Don't buy into the pitch without diving deep. Don't take them at their word alone. Do your due diligence. Get testimonials from friends and people you trust. Look at impartial data and statistics. What is the reputation? What are the facts?
Due diligence goes beyond validating a professionals credibility, too. It also means educating yourself. While you don't need to try to do their job, you want to have the know how to carry on a conversation and engage in what they are doing for you. You want to have some independence in these areas, even if you do not have mastery. This will allow you to better recognize red flags and take charge of your own finances.
Myth: The percent return on investments just aren't enough to be worthwhile.
Truth: When profits compound over time, even small investments and small returns matter.
Some people are wary of investing in general because, on the surface, it seems like a lot of money for a very small return. When you're looking at an 8%, 10%, or even 12% average returns on tens or even hundreds of thousands of dollars of investments, what looks to be a meager return can be a tough pill to swallow. Why would anyone invest?
The answer is in how those returns compound over time. What seems to be small returns grows and accelerates into so much more than the initial investment is worth when added up in a buy-and-hold context over twenty or thirty years. For the real estate investors, there is building equity and cash flow, which multiplies with the acquisition of properties over time.
Myth: You have to trust your gut.
Truth: Ignore your gut, trust the proven system.
The idea that your intuition is always right is an overplayed tune. We are emotional, impulsive creatures who often act out of fear and feelings. If we “trust our gut” when it comes to investing, how many times will bad decisions result? This isn't to say intuition is always wrong but it is often misguided. We know that, for example, many stock market dips and crashes are the result of investor panic and mass sell-offs. They sell when they should hold.
When we apply this to real estate, we see investors who pull out of or jump into markets that seem “hot” or on the verge of disaster without considering their underlying conditions. As a result, opportunities are missed or investors jump into markets that lack sustainability for long-term profits. These sorts of decisions are usually rooted in emotion and gut feelings.
Myth: Investing should be fast-paced and fun.
Truth: Investing should be reliable and a little dull.
Not only are we as human beings emotional, but we're constantly in search of entertainment. We want that next high. We love dopamine. We want things to be thrilling. We expect our investments to offer that same thrill! That's why we saw, once, such a huge day trading craze. That's why the average American loves the idea of flipping thanks to the latest HGTV show. There's something exciting about the quick buck and the fast turnaround. That said, that's not what investing is supposed to be.
Investing, ideally, is something you set up and can let go. At its best, investing is boring. It's a comfortable old shoe. You know it, you can count on it. You know what it's going to be and do for you. It's not flashy, it's not all the bells and whistles. Investing isn't about the thrill—it's about building a meaningful financial future, even when it is boring and painful.
Myth: If it worked for my dad, it will work for me.
Truth: The past doesn't predict the future.
So many of us turn to our more experienced mentors, family members, and financial idols for our investment decisions. But what we all have to remember is what worked for them won't necessarily work for us. While many of the principles and strategies still may apply, their specific experiences can't be replicated. The environments, technology, investing methods, and circumstances we live in are wildly different.
You have to adapt timeless knowledge to fit where you are now, rather than try to recreate the success of the people who have gone before.
When you do, creating a custom, tailored investment portfolio, your best financial future will be within reach.
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Original source can be found here.