Investing

3 Big Lies About Investing That Could Dramatically Lower Your Returns

Investing should be the cornerstone of your financial strategy. By making appropriate investments, you can grow retirement savings exponentially or substantially increase your income. But there are some things that “everybody” knows about investing that you should ignore if you want to be successful. These so-called truths about investment are actually big lies, and they could cause you to lose a lot of money if you listen to them.

Studying the market leads to success

Studying the market is part of investment success, but it’s not as big a component as you might think, according to Forbes. Studying the market as a whole just gives you information about overall trends. It’s much better to study individual companies you’re considering investing in to see whether they’re viable, stable and likely to make money in the long run. While you’re at it, you should study yourself. One of the biggest reasons for investment failure is sticking with losing investments for emotional reasons. Find out what your biases are and what motivates your investing behavior so you don’t sabotage your own chances of success.

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Some investments are guaranteed to succeed

Whether its tech funds, your own company’s stock or any other investment, there’s an element of risk. Unless you have special insight into the future, you can’t predict with 100 percent accuracy whether a given investment is a money-maker. Don’t put all your money into one type of investment thinking it will guarantee success. Instead, diversify your portfolio so that you’ll come out ahead no matter what happens with any one particular investment.

Related: 3 New Investment Platforms You Never Heard Of (Until Now)

Falling stocks always go back up

Many would-be stock investors have lost their shirt based on this lie. Sometimes stocks that fall go back up, and other times they continue to fall. So if you’re faced with a choice between a stock that’s currently rising in value and one that’s falling, go with the one that’s already making investors money instead of counting on a miracle.

Investing isn’t like playing slot machines in Vegas, you don’t win because of good luck. Instead, you have to pay attention, know what you’re doing and rely on advisers you can trust. Most of the big lies in investment are based on the idea that you can predict exactly what the market will do five, 10 or 20 years from now. You can’t. But you can learn as much as possible and make good decisions based on what a particular investment is doing currently.

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