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4 Common Investing Myths: What's Holding You Back?

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What we’ll cover:

Investing can be a great way to help you reach your financial goals – whether it’s saving for your kids’ education or building wealth. 

But a few myths about investing are so persistent that some people could still feel hesitant about getting started – despite the fact that we have more investment opportunities and resources at our fingertips than, say, 10 or 20 years ago.

According to a June 2021 survey from Marcus by Goldman Sachs, only 17% of Americans are currently investing in non-retirement accounts.

So what are some of these misconceptions? The two we frequently hear is that investing is too complicated to figure out or that it’s too risky.

To be sure, investing does involve risk. But there are also risks in not investing, and skipping out could impact your potential to achieve certain financial goals, like living out the retirement you’ve always dreamed of. 

Ahead, we’ll go over four big investing myths that have stuck around over the years and see if we can help dispel them once and for all. 

1. You need to have a lot of money 

We can understand why this myth has staying power. Investing wasn’t always available to everyone. Back in the day, you’d typically have to pay a broker to execute trades for you, and not everyone could afford the commissions and fees.

On top of this, popular movies about Wall Street often show high-powered people yelling in fancy suits as they’re wheeling and dealing in the financial markets. All this can make investing seem like a super exclusive club – one that’s reserved for the wealthy.  

But the reality is almost anyone can start investing these days. Just take a look at how many online investment platforms have popped up in recent years with the goal of helping everyday investors get into the market. There are many investment firms that can set up and manage a portfolio for you with low minimum balance requirements and low fees.  

Good to know: While you don’t need a pile of money to start investing, it’s a good idea to make sure your savings (think: emergency fund) are in order first. That way if unexpected expenses come up, you can cover them without having to pull money out of your investment account – which isn’t meant to be a personal ATM. Ideally, the money in these types of accounts should stay invested in accordance to your investment plan. 

2. Investing is too complicated and time-consuming

From our June 2021 survey, of those who are not currently investing, 25% aren’t doing so because they feel like they don’t have enough knowledge. And 27% find investing to be overwhelming.    

It’s true that investing can seem daunting, especially to newcomers. With so many different types of investment options to choose from, things can get a little confusing (especially when you encounter industry jargon).  

But here’s the thing: Investing can be as complicated as you want it to be. In other words, it doesn’t have to be complicated! It’s definitely possible to keep things simple. It all depends on your investment style (see Active vs. Passive Investing). 

For instance, if you’re new to investing or simply prefer a more hands-off approach, you could choose to “automate” your investing. This is where a digital investment platform or robo-advisor can help you put together and manage a diversified portfolio – after you provide some basic information about yourself, your investment goals and risk tolerance. With automated investing, you usually don’t have to worry about picking the “right” stocks or funds and building a portfolio from scratch. 

On the flip side, more experienced investors can choose to build and manage a portfolio on their own by personally handpicking stocks, bonds and other securities. This approach can be time-consuming because it often means you have to take care of many investment activities on your own, which may include things like market research, asset allocation strategy and portfolio rebalancing.  

Now, you don’t need to have a financial degree or be a financial professional to start investing, but it’s still a good idea to familiarize yourself with some investing basics. Knowing the fundamentals of investing can help you make informed decisions about your money and build confidence as an investor. 

Feel free to bookmark the Marcus resources hub, where we have plenty of investing explainers to help you get up to speed.

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3. Investing is too risky

Some people may believe investing is not worth the risk. After all, there’s no guarantee you’ll make money – and you could even lose your original investment. 

But here’s what you should know: It’s true investing involves risk, but historically, over long periods, financial markets have generated higher returns than interest earned from a savings account.    

Plus, there are ways to strategically manage risk. You’ve probably heard about the importance of diversification. Basically, this is a strategy where you divvy up your money across different investments (like stocks and bonds) to help spread out your investment risk.

The idea is that if a certain class of assets isn’t doing well, other assets in your portfolio might be able to help offset the losses with gains. (Keep in mind though: Diversification doesn’t guarantee a profit nor can it protect against loss.)

People also tend to associate investing with just picking stocks whose values can go up or down on a day-to-day basis.

But there are other investing options to consider like bonds, ETFs, money market mutual funds, index funds, mutual funds – the list goes on. The point is different investments carry different degrees of risk (for example, bonds are generally considered less risky than stocks), and a key to investing is knowing how much risk you’re willing and able to take on. 

Knowing your risk tolerance (as well as time horizon) can help you choose an investment strategy that best fits you and your goals. 

Bottom line: When you invest, there’s a potential for losses, but there’s also the possibility for gains. While day-to-day volatility can be unsettling, remember that periods of market fluctuations are normal and expected. 

4. It’s better to put money away in a savings account where it’s safe

When you put money away in a savings account at a FDIC-insured bank, that money is generally considered “safe” because there’s a low risk of losing your deposits, which are insured up to a certain dollar amount ($250,000 per depositor, per insured bank, for each account ownership category).  

This may lead some people to think that saving is better than investing. But saving your money instead of investing it is not entirely risk-free. 

Think of it this way: While your money may earn interest in a bank account, inflation can gradually erode the value of your savings. In other words, the interest you earn in a savings account may not be able to help you keep up with inflation. Investing offers an opportunity for you to potentially earn a better return than what you could get through a savings account, helping to protect the value of your money as the cost of living increases over time.

Know that saving and investing is not an “either-or” consideration. Both can help you reach your financial goals. The key is finding the right balance between how much to save and how much to invest after you’ve hit your savings goals. Consider working with a financial advisor if you need help crunching the numbers and putting together a strategy. You can also check out our article on Saving vs. Investing to learn more. 

This article is for informational purposes only and shall not constitute an offer, solicitation, or recommendation to buy or sell securities, or of an account type, securities transaction, or investment strategy. This article was prepared by and approved by Marcus by Goldman Sachs®, but is not a description of any of the products or services offered by and does not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates, subsidiaries or divisions. Goldman Sachs Bank USA and Goldman Sachs & Co. LLC are not providing any financial, economic, legal, accounting, tax or other recommendation in this article and it is not a substitute for individualized professional advice. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice.  Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA, Goldman Sachs & Co. LLC are or any of their affiliates, none of which are a fiduciary with respect to any person or plan by reason of providing the material or content herein. Neither Goldman Sachs Bank USA, Goldman Sachs & Co. LLC nor any of their affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in this document and any liability therefore is expressly disclaimed.

Investing involves risk, including the potential loss of money invested. Past performance does not guarantee future results. Neither asset diversification or investment in a continuous or periodic investment plan guarantees a profit or protects against a loss.  

Investment products are: NOT FDIC INSURED ∙ NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY, GOLDMAN SACHS BANK USA ∙ SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED