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10 Stock Market Lies First-Time Investors Almost Always Believe

Avoid these common stock market myths so you can make smarter investing decisions.

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Updated Sept. 21, 2024
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When you're new to investing, it's easy to get caught up in common myths that can cloud your judgment and lead you astray.

These misconceptions can prevent you from making good investing decisions.

Understanding the truth behind these lies is crucial to unlocking the wealth secrets of the stock market. Here are 10 stock market myths that first-time investors often fall for — and the truths you need to know.

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The ultra-rich have also been investing in art from big names like Picasso and Bansky for centuries. And it's for a good reason: Contemporary art prices have outpaced the S&P 500 by 136% over the last 27 years.

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Investing is too difficult

Yingyaipumi/Adobe Using smartphone with cryptocurrency money

One of the biggest lies first-time investors believe is that investing is too complicated for the average person. In reality, many investment platforms are user-friendly, and there are countless educational resources available to help new investors get started.

You don’t need a finance degree to understand investing basics so you can start building your net worth. It just takes a willingness to learn and a long-term mindset.

Mastering the stock market isn't about complexity — it's about patience and consistency.

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You shouldn't invest until you are wealthy

Roman Motizov/Adobe Money American dollar background

The idea that you need a large sum of money before you can invest is simply not true. Thanks to innovations like fractional shares, it's easier than ever to begin investing with just a small amount.

Waiting until you’re "rich" will only delay your ability to grow wealth over time. The earlier you start investing, the more you can take advantage of compounding returns.

You can always start investing later

Farknot Architect/Adobe Businesswoman stacking coins

Procrastinating on investing can cost you more than you think. The longer you wait, the less time you have for your investments to grow.

While it's never too late to start, those who begin earlier can benefit from years of compound interest, potentially leading to significantly higher returns.

Even small, consistent investments made early on can grow into substantial wealth over decades.

Get a free stock valued between $5 to $200

Secret: You don't need thousands of dollars to buy thousand-dollar stocks or create a diverse portfolio.

Robinhood offers a method of investing called “fractional shares.” On its own, one share of a single stock could cost a lot of money, making it difficult to diversify. Robinhood allows you to buy pieces of stock instead, so you have the option to build a diverse portfolio quickly.

Let’s say you want to invest $250, as an example.

With that amount, you could build a relatively diverse portfolio with an investment of $50 in a big tech stock, $50 in a retail stock, $50 in an energy stock, $50 in a manufacturing stock, and $50 in a bank.1

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You're savvy enough to beat the market

wichapon/Adobe virtual investing screen

Many new investors believe they can outsmart the market by picking the “right stocks.” However, even professional investors struggle to consistently outperform the market.

Research shows that the vast majority of individual stock pickers fail to beat the market over the long term.

A more reliable strategy — and one advocated by legendary investor Warren Buffett — is to invest in low-cost index funds that track the market’s overall performance rather than trying to pick winners.

You're smart enough to time the market

sophon/Adobe Investor at work

Timing the market — trying to buy when the market is at its low and sell when it is near its high — sounds like a smart strategy. But in practice, it’s nearly impossible to do consistently.

The stock market is unpredictable, and even the most experienced investors can't always anticipate market movements.

Instead of trying to time the market, focus on “time in the market.” Long-term investors who stay invested through market ups and downs often see the best results.

Following trends is the path to riches

Golden House Images/Adobe stock exchange market chart

Jumping on the latest stock market trends can be tempting, but it’s not a sustainable strategy for building wealth. Trends come and go, and by the time you're aware of them, it might be too late to capitalize.

Chasing trends often leads to short-term thinking and emotional decisions, derailing your financial progress. A more effective approach is to stick to a diversified investment strategy that aligns with your long-term money goals.

Expenses don't matter

Kittiphan/Adobe stressed woman checking bills

First-time investors often overlook the impact of fees and expenses on their returns. Every time you buy or sell a stock, mutual fund, or exchange-traded fund (ETF), there can be hidden costs such as trading fees or management expenses.

These fees may not seem significant, but over time, they can eat into your returns. It’s important to choose investments with low fees and be aware of any charges associated with them. Lower expenses mean more money stays in your pocket.

You should sell if stocks start to fall

Rido/Adobe Stock market crash

When the stock market dips, it can be tempting to sell off your investments to avoid further losses. However, this is often a mistake.

Selling when stocks are down locks in your losses and can prevent you from benefiting when the market recovers. Historically, the market has always bounced back after downturns. So, it’s often better to stay the course and wait for a recovery.

Successful investors know that market volatility is part of the process.

If you're not getting rich quickly, something is wrong

Wipas/Adobe Woman putting coins on stack

Many new investors expect fast results, but the stock market is not a get-rich-quick scheme. Building wealth through investing takes time and patience.

Slow, steady growth is the key to long-term financial success. The wealthiest investors are those who play the long game, steadily growing their portfolios over time through consistent, disciplined investing.

The sooner you accept that investing is a marathon and not a sprint, the better off you will be.

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You need to check your portfolio every day

Angelov/Adobe financial and investment products

Constantly checking your portfolio can lead to anxiety and impulsive decisions. Market fluctuations are normal, and it’s easy to get spooked by short-term losses if you are monitoring investments too closely.

Instead of focusing on day-to-day movements, stick to your long-term plan and review your portfolio periodically — perhaps once a quarter or yearly. Remember, patience is one of the most important wealth secrets when it comes to investing.

Bottom line

miztanya/Adobe Economical stock market graph

The stock market can be intimidating for those who start investing, but understanding these common lies will help you avoid costly mistakes.

Building wealth isn’t about trying to time the market or get rich quickly. Rather, it’s about long-term consistency and making smart, strategic decisions.

You can set yourself up for long-term success by staying informed and avoiding these pitfalls.

Masterworks Benefits

  • Invest in art like a millionaire for a relatively low cost
  • Art investments have outperformed the S&P 500 by over 131% for 26 years
  • Purchase shares of artwork by top artists
  • Hedge against inflation and diversify your portfolio


Author Details

Adam Palasciano

Adam Palasciano is a personal finance-obsessed and money-savvy individual who loves to hash out content on all things saving money. He specializes in writing millennial-friendly personal finance content, covering topics ranging from trending financial news, debt, credit cards, cryptocurrency, and more.