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Sadly, financial savviness isn’t something they teach you in high school. At least it wasn’t when I was there, which partly explains why I’m now a writer.

There comes a time when it’s prudent to start trying to understand, at a bare minimum, some of the basic principles of financial planning.

One key aspect of planning for the future is investing wisely, which sounds more daunting than it really is.

We often fall back on the same old myths, commonplace assumptions, and excuses to avoid taking responsibility for our finances, on top of the fact that money can be a tricky topic to talk about.

The first thing to mention is that this isn’t a journey you need to go on alone, because there are companies that specialise in helping you protect and build your wealth.

Now we get on to the topic of busting common myths, four of which we’ll tackle with the help of Moneyweb.

I don’t have enough money to invest

Every journey starts with a single step.

It sounds like a corny inspirational poster on a dorm room wall, but it’s true:

There are very few barriers to entry for anyone wanting to set up an investment portfolio. Most reputable unit trust platforms, as well as reputable robo-advice platforms, require a minimum investment premium of R500 per month or a lump sum investment of R20 000, to begin with.

If you can’t afford a monthly premium of R500, start setting aside as much as you can every month in a separate account to build up ‘seed’ capital.

Then use that seed capital to set up your investment portfolio.

Investing is too risky

Your money is safe in your bank account, right?

Unless you banked with VBS, then sure, but proper, long-term investing is nothing like spinning the wheel at Sun City:

Many people shy away from investing because they believe it is akin to gambling and the risks are too high. There is a common misconception that, because investment markets are volatile by nature, investing in equities represents a higher risk whereas investing in cash is lower risk…

While investment markets are more volatile [than leaving it in the bank], a well-diversified portfolio will grow your wealth in the long-term making it less risky.

On the other hand, keeping your money in cash will devalue the purchasing power of your money in the long-term, effectively making it a more risky place to put your money.

It’s all about managing risk and choosing which investment strategy best suits your needs.

I’m too young to think about retirement

Fancy a reminder of how old you are? The Matrix came out in 1999, and the kid from The Sixth Sense is 33 now.

Even if neither of those rings a bell, this term should – compound interest:

Time is compound interest’s best friend and the earlier you begin investing, the more your investments will grow.

Further, if you don’t take advantage of the tax benefits of investing in a retirement fund, you are doing yourself a disservice. You are permitted to invest up to 27.5% of your taxable income towards a registered retirement fund, which effectively allows you to invest with pre-tax money.

With so many variables in play between now and your retirement, a longer investment period also means more time to prepare for possible setbacks.

It is too late to start saving for retirement

Starting early is great.

Not starting at all is just plain reckless.

You may just have to be more aggressive in how you save, which means taking a close look at your lifestyle:

The first step is to undergo a ruthless budgeting exercise to free up some income that you can redirect towards investing for retirement. As you settle debt and free up more income, you can slowly increase your monthly savings.

Thereafter you will need to consider working past the age of 65 to allow you more years to earn and invest.

Retiring at 70 is still better than not retiring at all.

Again, this sounds overwhelming, but going at it with the help of an expert like those at Consequence Private Wealth at least gets the ball rolling.

Stop buying into the myths, start investing now, and reap the rewards down the line.

[source:moneyweb]