This post is sponsored by Lexington Law.


A lot of people are wary of investing. And that is largely in part due to myths and incorrect information surrounding investing financially. Have you heard things like “the safest place to keep your money is under your mattress” or “real estate is the best investment?” If so, it’s very likely you’ve heard at least a few of these investment myths as well.

Here, we are going to do some myth busting to set the record straight:

1. You need thousands of dollars to invest.

False! There are many robo-advisors that have no or low minimums required to open an account. You can start with just $10 if you want to! The more you can invest, the more your money will grow but don’t let that keep you from getting started.

Related: Investing 101: A Beginner’s Guide To Investing For Wealth

If you get into the habit of investing, you’ll be able to add more money to your investments as your income increases. I know a few people myself who started investing with just a few hundred dollars several years ago and now they are able to prioritize contributing thousands per year to their growing accounts.

2. You need excellent credit to invest.

A high credit score is not a requirement to begin investing. No financial planner, robo advisor, online brokerage account or the like is going to pull your credit report. Whether or not it’s a good idea for you to invest right now is your own financial responsibility.

That said, your credit can be an overall indicator of your financial health. A low score could mean you have a high debt-to-credit ratio or are missing payments. And both of those mean you shouldn’t be putting money towards investments.

You can get your Experian credit score for free here plus a customized report card with more information on your financial health. If you’re struggling to improve your credit, work with an team who will advocate on your behalf to improve your overall financial situation. Taking the time to improve your credit is one investment that is absolutely worth it.  

3. If you invest, you don’t need to worry about your future finances.

Investing can be hands-off if you want it to be! A set-it-and-forget-it method can be optimal with a robo-advisor who will auto-rebalance your portfolio given your level of risk and time frame.

That said — just because you put a few thousand dollars in an investment account doesn’t mean you’re going to be set for life. The market fluctuates and an average return isn’t a guaranteed return.

You’ll still need to plan for your financial future including planning for retirement, savings goals, budget adjustments, income fluctuations, emergencies, and growing your family. Don’t be hesitant to reach out to the knowledgeable staff at Lexington Law before major life milestones like purchasing your family home. They can help prevent you from being taken advantage of and save you potentially tens of thousands of dollars due to bad credit.     

4. Investing is one-size-fits-all.

Just because what your friend is doing is working for them doesn’t mean it will work for you! You likely have different goals, timelines, expenses, and income levels. All that means your investment strategy won’t be exactly the same as anyone else’s.

Your best bet is to speak with a financial planner and educate yourself on the basics of investing. Target your strategy towards your own goals — not your best friend’s.

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5. You can only invest if you have 50+ years to let your money grow.

It’s true that the longer you can let your money grow for the more you’ll end up with.

This is all thanks to compounding returns. Say for example you put $5,000 in an investment account today and continue to put $5,000 per year into that account. Assuming an average growth rate of 7%, that money will turn into around $500,000 in 30 years time. However, if you just saved the same money in the same time, you would only have $150,000.

As you can see, the more time you have to let your money grow, the better off you’ll be. But don’t let that deter you from even investing for 5-10 years if that’s what you have and that’s what makes sense for your goals. Some growth is better than no growth!

6. Investing is too risky for the average person — you might as well gamble at the casino!

There are types of investments that are riskier than others. But unlike gambling, you don’t need to feel lucky and the cards don’t favor the house. Investing is also not an all-or-nothing strategy. It’s diversified and has an average return of 7%. Gambling at the casino will likely leave you eating ramen noodles until your next paycheck.  

7. All types of investing are the same.

Nope. And this primarily has to do with the level of risk involved as well as the type of investment. Funds are pulled together from multiple investors making it far less risky for each individual. Bonds are a less risky route than stocks, but often have a lower return.

And that leads us to…

8. Real estate is a great investment.

Unlike the stock market, real estate has no guaranteed returns. Plus, like we discussed in #5, it’s far more likely that your money is going grow more significantly over the years if you were to invest in the stock market vs property. Real estate has too many costs (property taxes, upkeep, etc) to make it a great investment in nearly all cases.

There’s nothing inherently wrong with wanting to own your own home. If that is your goal, by all means go for what you can reasonably afford! A house is not an investment but an asset with liabilities. But don’t have the mindset that it’s an investment. That is only setting you up for disappointment.

(I’m not saying that you wouldn’t be able to make money off of real estate given the right circumstances. I am, however, encouraging you to have realistic expectations and a solid mindset going into it.)

Related: 10 Things To Do The Year Before You Buy a House

9. You can only invest in one place.

Not true at all! You are pretty much free to invest your money in any legal avenue you want. Our friends at Lexington Law do caution you to avoid scams and MLMs (multi-level-marketing businesses) as well. Knowing the signs of scams will help you keep your hard earned money growing in the right places.

10 .Previous returns will guarantee future returns.

It’s easy to look at a stock or fund that’s doing well. Maybe someone even told you about it or you heard it on TV. That past growth, however, does by no means guarantee a high future return!

Many people might be interested in buying this stock now because of what they heard but it could just be a bubble. These people are generally looking to make a quick buck (a no-no for a solid investment strategy). It’s best to avoid these investment trends all together and listen to your financial advisor or let your robo advisor do the work fo you.  

So there we have it — ten myths that might be keeping you from investing. As always, it’s important to seek your own financial education and work with specialists who will guide you.

Have you heard any of these myths before? Do any of them surprise you?

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