This post may contain affiliate links, allowing us to earn a commission on the products we would recommend to our families and closest friends. You can find more info on our Legal Stuff page.

This post comes from personal finance blogger and Savings and Sangria reader, Alana Downer. If you’re on the fence about investing, check out Alana’s signs that you’re ready to start investing!

7 Ridiculous Myths About Investing – And What You Should Really Expect

Investing seems like a promising way to make some extra cash. Some people invest to pay off their debts, and others invest to meet lofty financial goals that simply wouldn’t be possible on their existing income. No matter what you’re attempting to achieve through investment, you need to have realistic expectations about what you’re getting yourself into.

There are a lot of myths about investing. Some people take these myths to heart and wind up never investing. Other people begin investing based on myths and are very let down when the results aren’t as spectacular as they expected them to be. A genuine understanding of investment will help you successfully meet your goals.

1. You Need a Lot of Money to Invest

Skip a fast food meal just once and eat leftovers. The money you saved is enough to begin investing. Successful new investors often start with a minimal investment and use their returns to make larger investments. They’ll grow ten bucks into hundreds and then thousands over the course of time, stacking exponents from what was once pocket change.

Slow investment requires patience. A little bit of money means a little bit of return, but if you stay committed, it really adds up. Skipping your daily $4 cup of takeout coffee can save you $1,460 a year. Imagine if you invested it, and that investment grew by 10% every year. Calculate that growth. In one year, that’s $1,606. In two, $1,766. And in five, $2,351. Throwing in an extra $10 here and there when you have it (or getting lucky with an investment that grows more than 10% annually) can turn a small amount of money that you’d never miss into a retirement fund.

2. Investing in Startups Will Make You a Millionaire

We all look at people who got in on the ground level with Microsoft and Apple with a little bit of envy. They invested a tiny bit of money and practically got rich. This does, occasionally, happen. Occasionally is the most important word in that sentence. With so many factors at play, it’s unwise to assume that your next investment payout is going to change your life.

Investing in startups is extremely risky. Statistics show that startups often fail, whether it be in their first year or fifth year. Unless you’re taking an active role in the growth of the business, there’s not much you can do to influence their success. Getting in on the ground level is only wise for people who have done a wealth of industry knowledge and access to the startup’s full plan for growth. If you’re not sure, simply avoid startups.

3. You’ll Make Tons on Your Investment Right Away

Investment requires patience – any type of investment that doesn’t is highly risky, as waiting an extra two hours to cash out can drain every penny you’ve put in. The more work and time you’re willing to put in, the better your results are likely to be.

This is why so many opt for nontraditional investments. Things like residential real estate investment have the promise of being largely profitable if you’re willing to put your money where your mouth is. Well-learned property flippers often make a decent living – enough to make it their sole career. It just depends on the amount of work you’re willing to put into your investments.

4. Cryptocurrency is the Perfect Investment

Cryptocurrency is highly controversial. At the beginning, everyone heard stories of bitcoin millionaires that highly influenced their interest in investing. Some people who had never so much as considered investing before jumped in with both feet. Depending on when they jumped in, they either gained a lot or felt extraordinarily burnt. That’s just the nature of the market.

Cryptocurrency investment isn’t like other investments. The market is unregulated and unstable, making it difficult to predict exactly what’s going to happen next. Cryptocurrency is a giant risk. While some people have seen success, it’s best not to count on crypto being the best option for you.

5. You Need Help to Invest

Can you read? Are you interested in the industry where you’re placing your investment? Do you have a reasonable idea of how much money you can actually spare or where you can cut some cash from your budget? Congratulations – you can invest all on your own.

As long as you’re diligent about following the news regarding the company you’ve invested in, you’ll know how to make wise decisions surrounding that investment. The other part of the equation is hesitating before investing more than you can afford to lose. That’s it. Be patient, well-read, and great with your budget. If you meet all the criteria, you don’t need to work with anyone else.

6. Investment is Too Risky

Investment, in general, is not risky. That having been said, some investments are riskier than others. While investment and gambling hardly compare, they do both come with the same risk of loss. Some people make uneducated investments with their life savings and wind up devastated. It does happen, but it’s entirely preventable.

By starting small and sticking to an investment budget, you’re less likely to take a powerful hit in the event that something unexpected happens. Research as much as you can. In fact, research until you’d rather eat a live frog than read another word about the company you’re interested in investing in. If you’re comfortable with the company’s future trajectory, it might be a good idea to make a modest initial investment. If not, pick a different company and start over again.

7. You Need to Focus on One Industry

Focusing on a single industry sometimes helps people keep things simple. It’s only one thing to read about and regularly follow. Despite how simple and painless it seems, don’t let yourself fall into the habit of being single-minded with your investments.

Diversifying your portfolio is a good thing. A devastating law, rule, or regulation, not including economic circumstances, can cause entire industries to take a big hit. Sometimes, it seems like it comes out of nowhere. Investing across multiple industries will prevent you from taking a significant hit – if only 25% of your investments are going through a rough patch, 75% of them are still ahead.

Investment isn’t something to be taken lightly. Dispelling the myths about investing is only half the challenge. The rest comes from growing into financial savviness and a willingness to learn. If you’re focused, determined, wise, and committed, you might be surprised to see just how much money you’ll make with smart investments.

About the author:

Alana Downer is a financial blogger with over 8 years of experience in investing. She is also a staunch supporter of creating smart, passive incomes and slowly gaining financial independence. Alana can often be found online, sharing her money tips and participating in discussions as she believes in spreading financial literacy among all those who want to learn.