Common myths about stock market investing.

Equity is the best investment choice for long-term goals, especially in India. But, investing in stocks or mutual funds is subject to misconceptions due to a lack of education on the subject. 20-year-olds talk about how they want to be responsible and avoid risky asset classes. While I am not questioning the risk appetite of any individual, if at such an early stage in their careers, people refuse to learn the basics of personal finance, especially long-term investing, they are not giving themselves any real chance to achieve financial freedom. And lack of knowledge gives rise to myths and misconceptions. Let's dive in to see the most common myths Indians have regarding equity investing.

Equity is the riskiest asset class.

There is a common belief that all asset classes are safer than equity (except cryptocurrencies). While this statement is not entirely false, what it lacks is context. Risk means the chances of actual returns differing from expected returns. In the long term, equity is one of the safer investments. For context, BSE SENSEX has never given negative returns for any period of 7 years or more. So, the next time you hear this statement, do question the time horizon and other factors affecting the investment.

Stock market investing is equivalent to gambling.

Many believe investing in the stock market is similar to rolling a die. Well, it is gambling for those who perceive it as gambling. However, successful investing requires careful analysis, research, and a disciplined approach. By studying company fundamentals, market trends, and economic factors, investors can make informed decisions, reducing the element of chance.

Only experts can make money in the stock market.

It's a widespread misconception that only financial experts or seasoned professionals can profit from the stock market. While experience can be valuable, individual investors who take the time to educate themselves and develop a sound investment strategy can achieve success. With knowledge and temperament, anyone can invest in the stock market.

Successful Investors have the gift of timing the market.

Many investors believe timing market movements is the secret to making substantial profits. However, consistently predicting market trends is almost impossible, even for seasoned professionals. Rather than attempting to time the market, one should focus on long-term investing, diversification, and fundamental analysis. Spending time in the market, not timing the market, tends to yield better results.

Investing in stocks is only for the wealthy.

Contrary to popular belief, investing in stocks is not limited to the wealthy elite. With the advent of online trading platforms and various investment options, stock market participation has become accessible to individuals with different financial capacities. Whether you have a small or large capital, there are investment avenues that suit your needs and risk appetite.

After addressing the prevalent misconceptions about stock market investing, let's uncover a harsh reality. Contrary to popular belief, investing in the stock market won't build wealth unless you work in the financial markets as a full-time professional. The purpose of equity investing is to grow wealth and not wealth creation. Unless you have millions of dollars to invest, focus on increasing your income rather than chasing higher returns. Witnessing individuals closely monitoring the markets throughout the day is disheartening, even though their total investments are less than one lakh rupees. Automate investments through systematic investment plans (SIPs) and other tools, while directing your focus toward enhancing your earning potential. This approach will yield significantly higher returns in the long term.