5 Common Investing Myths That Are Costing You Money

Getting started with investing can feel intimidating. Often, the biggest hurdles aren't in the markets themselves, but in the myths and misconceptions we carry with us. These false beliefs can cause paralysis, lead to poor decisions, and ultimately, cost you significant money over time.

Let's debunk five of the most common investing myths so you can invest with more confidence and clarity.

Myth #1: "You Need a Lot of Money to Start"

The Myth: Investing is a game for the wealthy. You need thousands of dollars just to get a seat at the table.

The Reality: This is perhaps the most damaging myth of all. Thanks to technology and innovation, you can start investing with the money you'd spend on a nice dinner.

• Fractional Shares: Many major brokerages (like Fidelity, Charles Schwab) now allow you to buy fractional shares. This means you can own a piece of a company like Amazon or Apple for as little as $1.

• Low-Cost ETFs & Mutual Funds: You can buy a share of a diversified ETF (Exchange-Traded Fund) that holds hundreds of companies for often less than $100. Some brokerages even offer fractional shares of these, too.

• No Minimums: Platforms have eliminated account minimums. You can open an account with $0 and fund it with whatever you can afford.

The Bottom Line: The most powerful force in investing is compound interest, and it needs time to work. Starting small with $50 or $100 a month is far better than waiting years until you have a "large" lump sum. Time in the market beats timing the market.

Myth #2: "Investing is Just Like Gambling"

The Myth: The stock market is a casino where you place bets on stocks and hope you get lucky.

The Reality: While both involve risk and uncertainty, their fundamental nature is different.

• Gambling is a zero-sum game. For you to win $100, someone else must lose $100. The activity itself (a spin of the roulette wheel) creates no lasting value.

• Investing is a positive-sum game. When you buy a stock, you are buying a small ownership share in a real company. That company uses capital to grow, hire, innovate, and generate profits. As the company becomes more valuable, so does your piece of it. You are participating in economic growth.

The Bottom Line: Gambling is betting on an outcome. Investing is owning a productive asset that grows in value over the long term.

Myth #3: "You Have to Be an Expert to Succeed"

The Myth: To make money, you need to spend hours each day analyzing complex charts, reading financial statements, and predicting the next hot stock.

The Reality: Some of the most successful investment strategies are also the simplest. You don't need to be a stock-picking genius; you just need to be a disciplined participant.

• The Power of Index Funds: As a beginner, your best friend is a low-cost index fund or ETF that tracks the entire market (like the S&P 500 or Total Stock Market). With one purchase, you instantly own a small piece of hundreds of companies. Your returns will essentially match the market's average returns, which have historically been very strong over long periods.

• Set It and Forget It: By setting up automatic contributions to a broad-market index fund, you are employing a proven, hands-off strategy that outperforms the majority of professional fund managers over the long run.

The Bottom Line: Successful investing is more about discipline and patience than it is about intelligence or expert timing.

Myth #4: "The Stock Market is Only Going Up Right Now, So It's a Bubble"

The Myth: Whenever the market hits new highs, it must be a bubble about to pop.

The Reality: While markets do experience corrections and bear markets, the long-term trend of the stock market is up and to the right. This isn't a fluke; it's a function of economic growth, innovation, and productivity.

The market reaching new highs is a normal occurrence. In fact, it's what it's supposed to do. If you look at a chart of the S&P 500 over the last 50 years, it is a series of climbing peaks and valleys. The new peaks significantly outnumber the old ones.

The Bottom Line: Trying to wait for a "dip" or a "better time" to invest often means missing out on long-term gains. Staying invested through the cycles is more important than trying to predict them.

Myth #5: "If a Stock Price is Low, It's a Bargain"

The Myth: A $10 stock is cheaper and therefore a better deal than a $500 stock.

The Reality: The absolute share price is almost meaningless. What matters is the value of the underlying company.

Let's say Company A has a share price of $10 and 1 billion shares outstanding. Its total value (market capitalization) is $10 billion.
Company B has a share price of $500 but only 20 million shares outstanding. Its total value is also $10 billion.

Both companies are worth the exact same amount! The $10 stock isn't "cheaper"; it just has more slices. A $10 stock can be wildly overvalued if the company is struggling, while a $500 stock can be fairly valued or even undervalued if the company is highly profitable and growing.

The Bottom Line: Focus on the company's overall health, prospects, and valuation metrics—not the sticker price of a single share.

By letting go of these common myths, you can shift your mindset from that of a hesitant spectator to a confident, long-term investor. The goal isn't to get rich quick, but to build wealth steadily over time by avoiding these common—and costly—pitfalls.

Disclaimer: This article is for educational purposes only and is not financial advice. All investments involve risk, including the possible loss of principal.