Get the facts and dispel myths and truths about investing

The reality behind some common investing myths, including whether or not it's the smartest way to make your money grow.

Get the facts and dispel myths and truths about investing
Find out the truth and bust the myths surrounding investing. Photo by Maxim Hopman / Unsplash

Most people believe that investing is just for business owners or those who are committed to financial or business problems. They also believe that investing involves putting their money at risk, even though anyone may do it and that there are numerous secure alternatives.

The interest in investing is increasing right now, especially among those looking for new ways to put their money to work. To dispel some common misconceptions about investing and prevent concerns from creeping in, read on.

False: It is necessary to have extensive knowledge of finance to be able to invest.

You can invest without the need for financial knowledge or paying a professional. In Mexico, there are several institutions where you can start investing, such as mutual funds, and many others.

False: By investing your money in any institution, you have no return.

The yield refers to the profit obtained from the investment of your money, and this will depend on the amount you invest and the conditions offered by the financial institution in which you invest it.

True: It is necessary to go to an advisor to create an investment portfolio.

If this is a new subject for you, the best thing to do would be to go to an expert to define the best way to invest your money. However, there is the possibility that you can enter this world on your own, and for this, you need to identify the types of financial products in which you can invest.

Variable income financial instruments

These are those for which you do not know the yield they will generate at the end of the term you choose. It is ideal for those who intend to invest for several years to achieve higher returns. For example stocks, some companies, or investment funds.

Debt financial instruments

These are those in which you already know the yield you will obtain at the end of the term; they are low risk and have greater liquidity or ease of disposing of your money. In this category, you can find Treasury Certificates, Bonds, and notes with yields payable at maturity, among others.

True: There are other investment options, and not only in businesses.

Before investing and making an investment plan, you should know that investing does not mean that you have to start a business. Several financial products can help you go from saver to investor. Some options are bonds, promissory notes with a liquid yield to maturity, and investment companies (better known as investment funds), among others.

False: You can invest without the need to make a plan.

Although you can invest without a plan, the risk is greater when you do not do it with full awareness and with a plan that allows you to obtain profits. What can help you have your objectives defined is the following:

Make a budget to identify the state of your finances.

Keep in mind that to start investing, you must have a certain amount saved, preferably not destined for emergencies.

Define the purpose of your investment. Keep in mind that when you invest your money, you will not be able to take it out whenever you want.

Establish the initial amount of your investment; with the help of savings, you will be able to increase it.

There are many ways to invest your money; you just have to define what you want in the short, medium, and long term with your money and investigate as much as you can about the option you choose. Remember that with financial education, you can take control of your money.