4 myths about the investment world

There are several myths that prevent people from investing, which can be detrimental. Here, some of these myths are dismantled so you can embark on your investment journey in a more enlightened way.

A big myth in the investment world is that only those who have a lot of money can invest. With the transformation of financial technology, access to investments has been democratized and it is now possible to invest with low amounts. By investing with smaller amounts the potential income will also be smaller in absolute terms.

Contrary to what you may think, starting early to invest can be very important, especially if you think in a long-term perspective. If you do it for many years, with a small monthly amount you can benefit from a smoother financial future.

It is also never too late to start investing. The money you have in the bank is affected by inflation, so it might be a good idea to invest it in products whose expected return is at least similar to the inflation rate. If you have money that you don't think you will need in the next 5 years, investing it, regardless of your age, can help you obtain returns in the medium and long term and increase your income when you retire.

Saving and investing are not exactly the same thing. If you are saving money in a savings account with no or very low interest rate, you are not investing. Money that is not being used will not generate as much income and won't accompany the inflation, which means that it could lose its value over time.

Investing is using your money to potentially create wealth over a period of time.

The biggest difference between savings and an investment is usually the risk. Saving has low (almost zero) risk, but also low gains. When investing, you have the potential for higher long-term returns, but also the risk of losses in capital naturally.

Investing always means taking some risk and nothing is guaranteed. The risk of capital loss refers to the possibility of losing some or all of the money invested, whether due to market fluctuations, unexpected events, mismanagement or other factors that could negatively affect the value of the investment.

Risk and return are usually related to each other. Thus, selecting a high-risk investment may result in a higher return, while betting on a low-risk investment may result in a lower return.

Each person has a different relationship with risk. While some people are intimidated by risk, others may have a certain appetite for it. For this, there are financial products with different levels of risk, which will suit different profiles of people.

How can you find out your risk profile? By filling out the Investor Questionnaire (MiFID II), which will tell you whether you have a conservative, moderate, or aggressive investor profile. See also our article on the Investor Questionnaire.

In conclusion, myths will always exist in the financial market. The important thing is to stay informed and not let myths and misinformation prevent you from taking advantage of products that can benefit you in the future.

And don't forget, it is essential for an investor to consider the risk of capital loss when evaluating investment opportunities and deciding how to allocate their financial resources.