--- title: 6 Investing Myths That Are Costing You Money description: The internet is full of misleading investment tips. Here are some to avoid. authors: - name: Mallika Mitra role: Contributing Editor url: https://money.com/author/mallika-mitra/ bio: Mallika Mitra is a contributing editor for Money, based in Chicago. She has covered investing and retirement for seven years and her work has appeared in CNBC, Bloomberg, Kiplinger, AARP, Barron’s, Bankrate, The Daily Upside, ETF.com, The Bond Buyer, PLANADVISER, PLANSPONSOR and Investopedia. education: Craig Newmark Graduate School of Journalism at CUNY Kalamazoo College at_money_since: 2020 articles: 395 covers: - Investing - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology also_seen_in: - CNBC - Bloomberg - Kiplinger - Barron's - Bankrate - WGN-TV - CBS News Radio - This Morning With Gordon Deal - Everyone's Talkin' Money social: - https://twitter.com/mitra_mallika - https://www.linkedin.com/in/mallika-mitra-4577a386/ published: '2021-07-08T17:48:04.000Z' modified: '2024-01-10T14:12:43.000Z' section: Investing tags: - Guides - SMM21 word_count: 1022 canonical: https://money.com/investing-myths-debunked-stocks/ type: Article source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Mystery investigation boards with a red string connecting to investing components, such loose charts, piggy bank, and money bill.](https://img.money.com/2021/07/Investing-5-Biggest-Myths.jpg) The investing world is full of good advice. It’s also full of misconceptions. Now that trading apps like [Robinhood](https://money.com/how-to-use-robinhood-beginners/) and [Webull](https://money.com/how-to-use-webull-beginners/) have made it easy for investing newbies to buy and sell stocks, ETFs and even [cryptocurrency](https://money.com/what-is-bitcoin/) at lightning speed with no fees, Wall Street suddenly seems much more accessible. But be careful not to make big moves with your hard-earned money just because you heard something on the internet. We asked financial advisors about some of the biggest investing myths they hear. ## Myth 1: Investing in the stock market is only for retirement Many investors are familiar with the [401(k)](https://money.com/401k-and-401k-rollover/), an employer-sponsored retirement account in which employers may match employees' contributions. Investors may have even been maximizing those contributions for many years. But the rest of their money? It might be sitting in a checking or savings account, instead of growing in the stock market. “This is surprisingly something that I run into more often than expected,” says Monica Sipes, partner and senior wealth advisor at Exencial Wealth Advisors in Frisco, Texas. The best outcomes Sipes sees for retirees are those that have money in retirement accounts, along with after-tax brokerage accounts, she says. “It creates much more flexibility when you are actually in retirement.” [Savings](https://money.com/best-high-yield-savings-accounts/) and [checking](https://money.com/best-checking-accounts/) accounts are useful for your emergency fund and daily expenses, but the rest of your money should be working for you in the stock market. ## Myth 2: Investing is a way to get rich quick [Meme stocks](https://money.com/how-to-find-the-next-meme-stock/), cryptocurrencies and [non-fungible tokens](https://money.com/what-are-nfts/) are booming. And while it seems like investors are becoming millionaires overnight, it's actually really, really [hard to do](https://money.com/make-money-trading-crypto-difficulty/). Investors rarely get rich from speculative assets like cryptocurrency, says Gregory Giardino, a financial advisor at J.M. Franklin and Company in Tarrytown, New York. Having an appropriate asset allocation — for example, the right ratio of stocks to bonds — and having the discipline to stick to a long-term plan are much more important for long-term success. Financial advisors [tend to recommend](https://money.com/bitcoin-gold-stocks/) keeping your allocation to risky assets to just 2%, and 5% at the absolute most. ## Myth 3: Your stock allocation should be 100 minus your age For a long time, subtracting your age from 100 to determine your stock allocation was the rule of thumb. It may make investing seem easier, but these days it’s also dangerous. Lifespans are increasing, and advisors say that this formula won't give the average investor enough equity exposure to keep up with inflation over time. A better approach would be to [subtract your age from 110](https://money.com/suze-orman-interview-retirement-rules/) to get the percent of your portfolio that should be in stocks, they say. But rules don't work for everyone. Take a hypothetical 80 year old with $20 million, who spends $200,000 a year and wants to leave a legacy to her children, grandchildren and charities. She may have up to 90% in equities if she has sufficient cash flow for her annual needs, says Marc Schindler, founding partner at Pivot Point Advisors in Bellaire, Texas. “It is more important to determine the investor’s risk tolerance, time horizon and cash flow needs to assign an equity allocation,” Schindler says. ## Myth 4: Gold is the best inflation hedge Gold has long been considered a way to protect a portfolio against inflation — but it’s not actually a good inflation hedge, says Jordan Benold, an advisor at Benold Financial Planning in Prosper, Texas. The precious metal got this reputation because it’s believed that as prices rise, so does the price of gold. However, history shows that gold has actually yielded a negative return during some of the most inflationary periods. Gold does best when the U.S. dollar is losing value compared to foreign currencies, so a “weak” dollar would benefit gold investors, Benold explains. A period of rising inflation would tend to weaken the dollar, which could benefit gold. But high interest rates (which tend to go up with inflation) could suppress the price of gold. “Gold is a good currency hedge,” Benold says. “Not an inflation hedge.” Many financial planners [recommend holding only a small amount of gold](https://money.com/gold-record-price/), no more than 5%. ## Myth 5: You must pay off all your debt before investing It’s definitely important to make sure you have a strong financial foundation before you invest — but that doesn’t mean you have to pay off all your debt before turning to the stock market, says Haley Tolitsky, a financial planner with wealth management firm Cooke Capital based in Wilmington, North Carolina. You should pay off high-interest debt, like credit cards, before investing beyond your employer’s 401(k) match, but you cannot afford to wait until your student loans are paid off to start investing, she says. “You would be missing out on years of compounding growth, which is extremely difficult to make up in your later years,” Tolitsky says. “The key is to understand your budget and allocate funds toward both financial goals.” ## Myth 6: Investors need to constantly check their investments One common misperception is that investors need to pay attention to every piece of financial news, stimuli or new investment ideas of the day, says Sean Pearson, associate vice president at Ameriprise Financial in Conshohocken, Pennsylvania. But that can do more harm than good, if it tempts you to take action. Investors should spend more time thinking about their financial responsibilities and goals than trying to time the market. “There is a more direct path to college or retirement savings than picking the right meme stock,” Pearson says. This isn’t to say you shouldn’t check on your portfolio and rebalance regularly, like once a quarter or year. But while it’s easy to get distracted by headlines about inflation or tax changes — and worry they might upend your savings and investing plan — those events likely aren’t going to mess with your long-term plan if you make it realistic and stick to it. ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/investing-myths-debunked-stocks/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Investing", "item": "https://money.com/investing/" }, { "@type": "ListItem", "position": 3, "name": "Investments", "item": "https://money.com/investments/" }, { "@type": "ListItem", "position": 4, "name": "6 Investing Myths That Are Costing You Money" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/investing-myths-debunked-stocks/#webpage", "url": "https://money.com/investing-myths-debunked-stocks/", "name": "6 Investing Myths That Are Costing You Money", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2021-07-08T17:48:04.000Z", "mainEntity": { "@id": "https://money.com/investing-myths-debunked-stocks/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/investing-myths-debunked-stocks/#breadcrumb" }, "dateModified": "2024-01-10T14:12:43.000Z" }, { "@type": "Article", "headline": "6 Investing Myths That Are Costing You Money", "articleSection": "Investing", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2021/07/Investing-5-Biggest-Myths.jpg", "width": 2880, "height": 1920, "caption": "Investing-5-Biggest-Myths" } ], "author": [ { "@type": "Person", "name": "Mallika Mitra", "url": "https://money.com/author/mallika-mitra/", "@id": "https://money.com/author/mallika-mitra/#author", "description": "Mallika Mitra is a contributing editor for Money, based in Chicago. 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