There are outdated stereotypes in the stock market that can become an obstacle in the work of a novice investor. Popular misconceptions do not allow you to successfully invest, causing great doubts about the correctness of actions. Let's take a look at some of them.
The main stereotypes of novice investors:
- It takes a lot of money to invest. There is an opinion that only having a large start-up capital at your disposal can you get a good profit. In reality, this is not at all the case. The market has all the necessary tools that allow you to invest and make a profit even without a large start-up capital.
- Always run ahead of the locomotive. Among newcomers, the belief reigns that you can only become a good investor if you constantly beat the market. This is wrong. It is very important here to correctly compose a portfolio that, in case of growth, will bring profit to the investor, and in case of a fall, limit losses.
- Brokers are not interested in making a profit for the investor. So say those who absolutely do not understand the specifics of the work of brokerage companies. In fact, it is the broker who acts as an intermediary between the investor and the exchange. He receives income in the form of a commission for each executed trade. Therefore, it is the broker, like no one else, who is interested in making an investor profit.
- Good earnings only to extremes. The stereotype that you can earn decent money solely on speculation misleads novice investors. You don't need to use extreme methods to make good money on the exchange. Long-term investment can bring a decent profit.
- The stock market is always growing. Although stock markets generally rise rather than fall, exceptions can occur. Therefore, experts recommend splitting your investment capital into two parts. Use the first part for active trading, and the second for savings.
Investments that are long-term are best done in bonds, securities of companies that constantly pay dividends. You also need to keep in mind the periodic review of the portfolio, which plays an important role in investing.
Newbie investors often do not understand the complexity of a given situation. Counting on luck, an inexperienced trader often makes many trades, putting their account at great risk. Such rash actions can be very costly.
