Investing: Expectations vs Reality

When you’re starting a new journey, it’s normal to have certain expectations. Unfortunately, however, expectation and reality are worlds apart. Similarly, misconceptions and misunderstandings leave people set unrealistic expectations for the investing and trading world.

For example, investing is like winning the lottery – one big win, and you’re set for life?

Not quite. The reality is far different and more challenging. That said, if you learn to invest past the basics and follow the rules of the game, you might be able to make some of your expectations a reality.

So, here we give you a reality check by resolving a few misconceptions about investing. If you want a financially secure future, then here’s everything you should know before diving into the world of investment and trading:

·  Stocks on Sale Guarantee Successful Returns

Reality: It’s possible if the company is exceptionally wonderful. But it’s not guaranteed.

Most pro investors buy stocks at a low price then sell for high to earn their profits. It’s an excellent strategy to maximize returns. Stocks on sale are as low as you can get in the investment market, but the profitability of stocks on sale is not guaranteed.

It’s unrealistic to expect that the value of a stock on sale will go up after you purchase it.

The stock already sold at a price below its value once. It may either continue to drop in value, go up, then drop again, or continue to go up as you expect. The fact is that it’s impossible to predict the direction of the market.

A better bet would be to invest in moderately priced stocks with a greater chance of bringing higher returns.

· Investing Guarantees Fast Returns

Reality: Investing can make you wealthy but probably not as fast you’re expecting. It won’t happen overnight.

Let’s let go of the ideology that investing is like winning the lottery – it’s not!

Investing indeed gives you greater returns than profits on your savings, but overnight success isn’t a guarantee.

Investing is a slow process that requires immense patience. Compounding, for example, is a form of investment that builds gradually over the years but ensures you have enough in your name for your retirement.

·  Market Will Always Profit

Reality: The Great Depression and the Great Recession in 1929 and 2007 are evidence that the market doesn’t guarantee a profit but crashes time and time again.

As a beginner investor, it’s best to learn from past market trends before making any decisions.

According to history, the market doesn’t ensure a profit. A recent example is the 2020 economic downturn that led to a recession with the COVID pandemic. Various businesses were forced to shut down across the globe, while the panicked buying worsened the situation. 

Plus, the market doesn’t always stay the same after a recession as it was before. After COVID, for example, there’s a significant shift towards remote working, contactless payments, and more.

Long-term investment strategies help protect you from the fluctuations of the market. Most pro investors recommend diversifying your portfolio and investing outside the stock market.

· Investing is Another Name for Gambling

Reality: Investing doesn’t always carry the same risks as gambling. Various techniques allow you to lower the risks for greater returns.

Watched too many Hollywood movies, and now you’re intrigued by the idea of making it big with some Poker and Blackjack? The unpredictability of the market makes the investment world risky but, it doesn’t offer the same level of intense excitement as a poker game.

You could minimize most, if not all, the risks involved in investing.

Most successful investors aren’t blindly risking their money. Instead, they research and learn about the best opportunities with the potential for greater returns before taking the plunge and investing.

While there’s no guarantee for success, the research minimizes the losses and increases the chances of success. In which case, it’s not a gamble at all.

·Investment Returns Can Be a Primary Income

Reality: Investing will make your retirement comfortable, but for the present, it’s best not to rely solely on investment returns as a primary income source.

Investing is a long-term goal that allows you to earn and save for a secure and comfortable life after retirement. Just as it won’t make you a millionaire overnight, it’s least likely to give you enough returns to act as a primary income source.

Following the best strategy and sticking to the ‘rules’ may let you have an early retirement, but it’s best not to leave your job over a what-if.

Takeaway: How to Invest the Smart Way

To conclude, it’s better to learn and educate yourself as best you can before starting your investment journey. Instead of keeping unrealistic expectations, take the time to read through different resources online or offline. Understand the ins and outs of the investment world, then make your mark.

That said, the internet will not have all the answers you seek. So, you might want to consider consulting a financial advisor.

Successful investment and trading aren’t easy, but they are not impossible either. Nowadays, various Fintech companies exist like Logiciel Services, Robinhood, Acorns, and others that make the investment world accessible for beginner investors through logiciel innovation.

I hope the article helped clear up some of the misconceptions and unrealistic expectations tied to investment and trading. So, invest smart and prepare for a comfortable future.