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Myths about investing

It’s fair to say investing has an image problem.

If you’ve never invested before, you may well think it’s just for City slickers with money to burn. Yet when you start to separate the fact from the fiction, investing is now more accessible than ever. Look behind the stereotypes and you never know, it might even be right for you.

Myth 1: It’s too risky

Of course, there are risks involved with investing. That’s why it always comes with this rather abrupt warning: ‘you may not get back what you invest’. 

But too risky? Before you can answer that, we need to explore how risk works and what it could mean for you. 

All investments can be categorised on a scale of risk. At the extreme end of the spectrum, you’ve got your high-risk, volatile investments such as hedge-betting. These are not for the faint-hearted as the value of your original investment can yo-yo all over the place. This means you could gain a lot or potentially lose everything. (We don’t offer this type of investment.)

At the more sedate end of the spectrum, you can find some very low-risk investments, such as what’s known as a ‘cautious’ fund. Invest into one of these and although your investment isn’t without risk, its value wouldn’t typically be expected to fluctuate much. This means you could enjoy a much smoother, gentler ride over time. (We offer these types of investments.)

Whatever your appetite for risk, there’s an investment out there to match it – from the super cautious to the highly adventurous and everything in between. The key is to understand the risks involved and how can they change over time. That way you can make an educated decision about how much risk is right for you.

Why take any risk at all? Well, in a nutshell, by taking a calculated amount of investment risk, you can give your money greater potential to grow than cash savings.

Myth 2: You have to be rich

Well OK, this might have been true in the past. But these days, thankfully, it’s much more democratic.

If you’re thinking about dipping your toe in the water with us, there a few ways you could do it, depending whether you’d like go it alone or get a helping hand.

If you want to choose your own investments or if you follow our advice, you can start investing with as low as €/$ 3.000 and with a maximum upfront cost of 3% for Mutual Funds.

Myth 3: You have to lock your money away

This is another myth that has its roots in a truth.

You’ve probably read that an ‘investment should be seen as medium-to-long-term commitment’ or ‘you should aim to hold it for at least 5 years’. This is very sound advice because of the bumpy nature of the stock markets. The longer you hold an investment, the more chance you have of smoothing out the bumps and making positive returns.

The myth is that you have to physically lock your money away. With most investments your money is not locked anywhere. There’s no fixed period you have to invest for and there are no penalties for selling your investments. You can absolutely access your money at any time with any possible profit or loss. 

That said, please don’t get the impression you should treat an investment like a savings account.

While it might be good for your peace of mind knowing that you can get your hands on the money if you had to, you really don’t want to have to rely on it. This is because withdrawing early could negatively affect your returns. And the one scenario you desperately want to avoid is being forced to sell when the markets are having a downturn as your investments could be worth less than what you put in.

That’s why one of the golden rules of investing is to make sure you have between 3 and 6 months’ worth of expenses saved in an emergency fund before you start. That way, if your car breaks down while the markets have a wobble, you can dip into your savings to get it repaired and leave your investments untouched so they have plenty of time to recover.

Myth 4: You need to be an expert

If you invest in shares, it’s good to keep your eye on the markets. Because if one of the companies that you’ve invested in does badly, you could potentially lose money. The price of your share will also be affected by other factors, such as supply and demand, interest rates and the wider economy – all of which you need to be aware of.

However, investing is not just about buying shares.

For the rest of us, shall we say ‘less-expert’ investors, investing in funds could be a way to start. Buying into a mutual fund is like buying a ready-made, off-the-shelf basket of investments. As we’ve already seen, they come in many variations from the very low risk to very high risk so you can find one that’s right for you.

Also, some mutual funds, such as multi-asset funds, invest in a broad range of assets, such as bonds, shares and property, allowing you to invest into different types of investments. Or, to put it another way, they allow you to put your eggs in lots of different baskets.

Funds can be less risky than buying individual shares in a single company because if one of the investments in a fund loses money, it could be balanced out by the other investments in the fund. Spreading your risk in this way is known as diversification – and it’s one of the golden rules of investing.

But perhaps the best thing about mutual funds is they’re put together by a fund manager – an experienced investment professional who knows more than a thing or two about investing.

As you’d expect from a global bank, HSBC has specialist teams of investment professionals who carefully select the investments in the HSBC funds and who manage them accordingly.

If you’re not confident about picking a mutual fund, why not ask one of our advisers to do it for you? By taking investment advice you can find out whether you’re even ready to invest, how much you should invest and – crucially – which mutual fund is right for your current situation.

Myth 5: You have to monitor your investments daily

Staying glued to the markets? Most of us can think of things we’d rather do with our time. 

This is another reason why multi-asset funds can be a good way to invest. They’re professionally managed aiming that they stay at your chosen risk level – again, making them less risky than investing directly in shares.

Myth 6: You have to know when it’s the right time to buy

There’s a perception that to do well on the markets, you need to buy when stocks are low and sell when they’re high. Investors can spend a lot of time and energy trying to identify when a share price has bottomed out or hit its peak to find the perfect time to buy or sell. 

The trouble is, there are so many factors influencing the stock market. Predicting outcomes is practically impossible. That’s why there’s a saying in investing that ‘it’s not about timing the market, it’s about time in the market’.

The important thing is to start as soon as you can and invest for as long as you can. Yes, there will be some downturns, maybe even some bad years but as long as you’re not forced to sell during a dip (see myth 4), you should be able to ride out any turbulence.

Before you start, a key question to ask yourself is how long you’re prepared to invest for. The longer your timeframe, the more volatility you should be able to deal with because you’d have more time to recover from any lows.

If you’re 5 years from retirement, you may want to select a cautious investment. If you’ve got 10 years or more to play with, you may be in a position to be more adventurous. Again, if you’re not sure what’s right for you, you could seek investment advice to get a professional opinion.

Myth 7: It’s a quick way to make money

This one you already know to be false. There’s no such thing as a free lunch, right? While there are always stories of people making money quickly through risky investments, look at what happened with the Dotcom bubble in the late 90s, what’s happening now with cryptocurrencies. Get-rich-quick investments usually don’t end well.

The fact is, the markets reward long-term investors. What’s required is not passion but a cool, calm head and the discipline and patience to leave your investments to grow.


This is for informational purposes only and does not constitute nor may be considered a solicitation or advice for the purchase or sale of deposits, securities, goods or other investment products or services or investment agreement. HSBC Continental Europe, Greece hereby does not advise, does not accept any obligation and does not assume any responsibility for the decision of the reader that may have been based on this information.


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