Every month, debit orders come flying off and the amount in my bank account dwindles at a rate of knots.
Much of that vanishes into thin air – rent, insurance, and medical aid, for example – with the chance that it may come in handy when something goes wrong down the line.
Those debits sting far more than the amount squirrelled away for investments, which I hope will one day prevent me from living under a bridge.
It’s not much, but it’s a start, and I’m in it for the long haul. According to Tamryn Lamb, who works for an investment management company, that’s the right attitude to have.
She recently busted four common investment myths on Fin24.
Myth: If it is too simple, it won’t work
“The most successful investors are those who over time, consistently spend less money than they make, save the difference, invest in undervalued assets, and are patient,” she explains.
“Yet this sounds too boring to be true, which makes investors susceptible to getting distracted or falling for things that seem to promise faster or greater growth, taking them off the right path.”
Myth: Quick wins will make me wealthy
When you invest, time allows your invested money to grow and compounding makes your money work harder for you.
“The key to successful investing is staying invested for long enough to reap the benefits from the potential returns, ride out the inevitable short-term ups and downs and allow the power of compound interest to increase the value of your money,” says Lamb.
“Don’t judge the daily performance of your investments. Successful investors have the patience to stick it out.”
That sentiment is echoed by Consequence Private Wealth, which has always maintained that consequences of decisions made today will bear fruit over the years based on the sound principles applied at their inception.
Myth: Economic forecasts will help me find the next best thing
Investors looking for the next opportunity often turn to macroeconomic factors to determine whether markets will or won’t deliver strong returns.
According to Lamb, the problem with forecasting is that no one has a crystal ball, particularly for a field as complex as economics which is driven by multiple underlying variables and factors…
“Consider working with a reputable investment manager to help you identify the right opportunities, and do not pay undue attention to predictions.”
Pick an authorised financial services provider you can trust, and get on that ASAP, because the power of compound interest is a wonderful thing when it’s working in your favour.
Myth: Rely on your gut when you invest
Lamb says one of the biggest culprits in making poor decisions is your emotions. When performance dips, investors often throw out their carefully considered investment strategies and change tack.
Alternatively, they hold back on making investment decisions until there is enough positive movement to reassure them of not getting hurt.
You’re playing the long game here, my investment friends, and snap decisions made along emotional lines will more than often backfire.
The safest bet is to get the pros on it, who won’t be swayed from their long-term goal of securing your financial security.
Look, those debit orders still sting a little, but that’s just the nature of life.
[source:fin24]
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