When it comes to investing, there's a lot of information out there, but not all of it is true. We'll help you sort fact from fiction by debunking three common investing myths.
Myth 1: Saving is investing
While it's important to put money aside in a low, fixed interest rate savings or money market account for emergencies and unexpected expenses, saving money isn't the same as investing. Investing is using your money to potentially create more money over time. There's risk involved with investing, but there's also risk in not investing. If your money doesn’t grow, you may risk not achieving your long-term goals.
This example shows how an investment of $550 a month earning 7% could produce nearly $600,000 more than a savings account earning 3% over the same time period.
Source: Edward Jones. Assumes saving $550 per month rounded to the nearest $5,000. Example is for illustration purposes only and does not reflect the performance of a specific investment.
The upward-trending blue line depicts the effect of putting $550 a month in a savings account earning 3% from age 30 to age 65. This approach would yield $405,000 by 65. The upward-trending green line depicts the effect of investing $550 a month in an investment earning 7% month over the same period of time. This approach would produce $990,000 by age 65, which is nearly $600,0000 more. These calculations assume saving $550 a month rounded to the nearest $5,000. The example is shown for illustration purposes only and does not reflect the performance of a specific investment.
Source: Edward Jones
Investing takes some homework. That’s why many investors seek professional guidance.
Myth 2: Buy and sell often
Being patient can be challenging, but following the latest investment fads and selling every time the market drops won’t get you to your goals. Instead, choose quality investments and have a financial strategy that can weather market ups and downs.
Myth 3: You're too young or too old
While it may be best to start early because your money will have more time to grow, it’s never too late to invest. If you’re 50 or older, you may be able to make catch-up contributions to your IRA or 401(k). Or, if you're closer to retirement, there are strategies available that can help ensure your money lasts.
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Find an Edward Jones financial advisor to help you start working toward your goals today. He or she can help you separate myths from reality, identify appropriate opportunities and develop strategies that are right for you.