Common Investing Myths (and the Truth Behind Them)
Investments are an accessible financial tool not most Filipinos tap into. Let’s separate fact from fiction by looking behind stereotypes and uncovering the truth behind Filipinos’ common myths about investing.
1. Investing is for the rich
Investing is not the same as it was 30 years ago. Investments are much more democratic nowadays. You don’t have to be wealthy to be involved. In fact, 61.2% of stock market retail investors earn less than P500,000 annually.
Thanks to many online investment advisory services and fund platforms, middle-class households can now start investing with relatively low investment amounts. You don’t need to have an enormous salary to build a better financial future. Budgeting is more important in establishing a comprehensive investment strategy.
Read: [Infographic] Top 5 Budgeting Techniques to Help You Save More Money
2. Investing is too risky
Investing will always involve risks, but not all investments have the same risk levels. Some assets are more volatile than others, like hedge funds. These kinds of investments are high-risk in which your original investment can swing all over the place.
On the other hand, there are also low-risk investments. There are still some risks involved with this type of investment, but its value wouldn’t fluctuate as much. This type of investment is best for beginners, as you can enjoy a smoother ride over time.
Whichever kind of investment you choose, you must understand the risks involved and how they can change over the years. With this, you can make the right decision on how much risk is right for you.
Read: Investing 101: Understanding Your Risk Profile
3. Saving = Investing
Saving your money is another kind of financial strategy. It’s a great cushion for unexpected needs and emergencies., but putting your finances aside in a savings account isn’t investing. and while you're at it, get a life insurance that doubles as an investment plan
Investments use your money to generate more cash after some time. With savings, your finances are just stagnant in your account.
While investing comes with risks, there are also risks with not investing. Your financial future is at stake when your money doesn’t grow. With this, you need to learn how to maximize your income, or else you won’t be able to reach your long-term goals like enjoying your retirement or sending your child to a prestigious university.
By investing in BPI AIA’s savings and investment plan, you can hit multiple birds with one stone as this package helps you save while significantly growing your income with its investment and life insurance plan.
4. You need to "time" the market
One of the most common tips veteran investors advise beginners is that you should buy when stocks are low and sell them when they’re high. With this, you can spend a lot of time finding out if a share is hitting rock bottom or reaching its peak just to know if it’s the perfect time to buy or sell.
Many factors influence the stock market, which can make it near impossible to predict its outcomes. What’s important is that you start investing as soon as you can and for as long as you can. Ask yourself, “How soon and how long am I prepared to invest?”
The longer you are involved with investments, the more you can deal with volatility since you’ll have enough time to recover from the lows. A five-year investment can be different from a 10-year one. With short investments, it’s best to select low-risk assets. Meanwhile, long investments can give you some room to play and be bolder with your choices.
5. You need to be updated with financial news
There is this misconception that you always have to tune in with financial news to plan your next investment moves. Usually, market events like companies paying dividends and announcing their earnings can have little to no effect on your long-term investment goals.
Create your investment strategy based on your investment goals and not what’s constantly happening with the markets. It’s best if you learned some investing basics like diversifying your assets so that you can put market events into perspective and be more comfortable as an investor.
Read: 5 Smart Investing Strategies During the Pandemic
Be a Confident Investor
Regardless of salary or age, anyone can be a successful investor. Investing can seem daunting at first, but you don’t need special qualifications to get started. What’s important is that you separate common misconceptions from reality so that you can determine the best opportunities and develop the right strategies.
BPI AIA makes it easy to invest and get insured despite the ongoing pandemic. To learn more about savings plans, schedule a virtual appointment with one of our Bancassurance Sales Executives today.