Some Stock Market Myths That Aren’t Myths – A Warning

By Christiaan van Huyssteen (@cvh23)

From 702:

4 beliefs about shares that keep you from growing wealthy

Many people don’t invest in shares, because they believe one or more of the following misconceptions:

  1. Investing in the stock market is tricky
  2. Investing in shares is like gambling
  3. Investing in shares isn’t for those earning a low income
  4. Investing in shares can make you rich, but you need to know a lot and have the time for research

Investing in the stock market over longer terms is nothing like gambling

If you can put aside R300 per month then you can invest in the stock market!

If they’re honest, most employed South Africans will admit that they can afford to save R300 per month, which is all you need to start investing in an index tracker such as Satrix. We’ll discuss index trackers in an upcoming article. For now, just know that it’s a way to own shares in the very best South African companies. And you need only R300 per month.

You don’t need to know anything to invest in shares and you don’t have to do any work. I have a fund manager who makes all my investment decisions. I never check my stocks and spend, maybe, ten minutes a month on my portfolio.

A good portfolio should contain some equities naturally, BUT encouraging people who don’t understand some of the basics of investing to invest a day after the markets hit an all time high is a classic warning sign. When you get to a point where everyone from your hairdresser to your grandmother is giving you a ‘hot tip’, then you should be scared. Don’t invest if you don’t understand the risks, if you don’t respect markets, or if you don’t know what you are investing in. I don’t think it is entirely responsible of 702 to give this kind of advice at a time when the stock market has just hit an all time high.

Are these ‘misconceptions’ really misconceptions?

  1. ‘It is tricky to invest’

It is not technically tricky to invest. If you have money, you can make a phone call and invest money.

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