This archive report was first published on 10 August 2019.
Published on August 10, 2019, investing can seem daunting, especially with misinformation and misconceptions surrounding it. However, with the right information, you can make informed decisions about your financial future.
Here are six investment myths you should ignore:
Myth 1: Investing is too complicated ¶
Investing involves putting your hard-earned money at risk in the hopes of making a return. While it's a high-stakes bet, it's not too complicated for the average person to understand. Seek out reliable information from online resources, verify everything, and consult a financial adviser who listens to your needs.
Myth 2: Investing is too time-consuming ¶
Investing only consumes your day if it's your job. For the average investor, it shouldn't take more than a day to get the necessary paperwork done. You can also use third-party service providers to streamline the process, such as using your bank to buy Treasury Bills instead of going to the Central Bank of Kenya.
Myth 3: You'll lose money ¶
This myth is only true if you invest without understanding where your money is going. There's no such thing as quick or easy money, so avoid schemes promising this. Instead, take a long-term view and research the investment vehicle, its returns, and risks before investing.
Myth 4: You need to start with lots of cash ¶
While having a large amount of cash can increase potential growth, it's not a requirement to start investing. You can begin with smaller sums, such as investing in counters at the Nairobi Securities Exchange for under Sh20, 000 or the m-Akiba bond, which requires a minimum of Sh3, 000 and offers a tax-free return of 10 per cent.
Myth 5: Bonds and bills are a sure bet ¶
While loaning cash to the Government through a Treasury Bill is generally considered safe, it's not always the case. Consider the Greece crisis, for instance. Corporate bonds are only safe as long as the issuer meets its financial obligations, and economic downturns or poor investment decisions can lead to downgraded credit ratings and plummeting bond values.
Myth 6: Your portfolio needs a specific investment ¶
There's no single investment that's a must-have. You can make money through various investments, and your personal risk profile should guide your decisions. Build a diverse portfolio to optimize your returns, but be comfortable with your picks.
