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Busted: 3 spooky investing myths

Grim reaperGhosts, skeletons and zombies – most of us can agree these are all pretty scary, right? Turns out, when you talk about “investing,” many people have a similar reaction to that of getting spooked in a haunted house.

Instead of running from investments and screaming like a banshee anytime someone mutters the words “stock market,” AICPA’s National CPA Financial Literacy Commission members want to put these investing myths to rest with tips for how to get past them:

Myth #1: I need a lot of money to invest.

False! Sean Stein Smith, CPA, CGMA, says that with the development of investing apps, and the increased number of opportunities to purchase fractional shares of companies, anyone can start investing simply with spare change from credit card transactions. It’s that easy! Employer offered 401(k) programs make it especially easy to invest by deducting straight from each paycheck; the automation means you likely won’t notice the money is gone.

Myth #2: I can’t put money into investments because I’m funding my kids’ education. 

Michael Eisenberg, CPA/PFS, says that this is one of the top excuses people have for not investing. The key here? Balance. Potential investors have to take a step back, look at their budget, and figure out what percentage of their income should go into retirement, and what percentage should go toward their kids’ education. There isn’t a one-size-fits-all solution, but balance is attainable. Of course, this could mean spending less each month – for example, packing lunches instead of eating out, or cutting back on morning coffee trips – but once long-term goals are in mind, these minor cutbacks will seem like nothing at all.

Myth #3: Investing in anything other than bank savings accounts or CD’s (certificate of deposit) means that I can lose money.

While it is true that investments can lose value, Neal Stern, CPA, says that you need to grow your wealth in order to have financial security in retirement. For example, retirement may be 30 years from now, but by then money in a regular savings account might not be able to keep up with inflation. Of course, an appropriate cash fund should be a priority. However, it’s also important to consider a balanced approach to investments that are well suited for long-term goals—the key is sticking with it through the ups and downs, it will pay off in the long run. 360 Degrees of Financial Literacy has great resources for beginner investors. Don’t forget to do your homework and never place money at risk that you can’t afford to lose. 

These are just a few of the common myths that our commission members have encountered, but it’s safe to say that investing doesn’t have to feel like a personal horror movie. For more information on investing and how to manage personal finances, 360 Degrees of Financial Literacy offers free resources – check it out, if you dare (Cue evil laugh).

Samantha Delgado, Manager – Communications, PR & Corporate Responsibility, Association of International Certified Professional Accountants

Grim reaper courtesy of Shutterstock

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