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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.

By Adam Palasciano

Edited by Chris Kissell

Updated Dec. 17, 2024

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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Investing is too difficult

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

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

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 This content is for informational purposes only, you should not construe any such information as legal, tax, investment, financial, or other advice. To get stock reward, new customers need to sign up, get approved, and link their bank account. Stock rewards shares cannot be sold until 3 trading days after the reward is granted and the cash value of the stock rewards may not be withdrawn for 30 days after the reward is claimed. Stock rewards not claimed within 60 days may expire. See full terms and conditions at <a href="https://robinhood.com/us/en/support/articles/open-account-pick-your-stock/">rbnhd.co/freestock</a>. Fractional shares are illiquid outside of Robinhood and are not transferable. Not all securities available through Robinhood are eligible for fractional share orders. For a complete explanation of conditions, restrictions and limitations associated with fractional shares, see the Fractional Shares section of our Customer Agreement. Robinhood Gold is offered through Robinhood Financial LLC and is a membership offering premium services available for a fee.

Even better news? Add a Robinhood Gold membership, and you’ll get access to 4.25% (as of 11/15/24) APY² Annual Percentage Yield. Rate valid as of April 12, 2024. To earn interest, a cash balance is needed. If you have a margin balance, there is no cash balance to earn interest. Interest rates for cash sweep and margin investing can change at any time. Fees may reduce interest earnings. on your uninvested cash³ Interest is earned on uninvested cash swept from your brokerage account to partner banks. Partner banks pay interest on your swept cash, minus any fees paid to Robinhood. As of Nov 15, 2023, the Annual Percentage Yield (APY) that you will receive is 1.5%, or 5% for Gold customers. The APY might change at any time at the partner banks' or Robinhood's discretion. Additionally, any fees Robinhood receives may vary and are subject to change. Neither Robinhood Financial LLC nor any of its affiliates are banks. All investments involve risk and loss of principal is possible. Robinhood Financial LLC (member SIPC), is a registered broker dealer. and the ability to buy and sell stocks 24 hours a day, 5 days a week.

Open and fund a Robinhood account and earn up to $200 in stock

You're savvy enough to beat the market

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

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

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.

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Expenses don't matter

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

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

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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This powerful combination checking + savings account from SoFi® allows you to earn up to a $300 bonus with direct deposit and grow your money with up to 4.00% APY.⁴ New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Direct Deposits received during the Direct Deposit Bonus Period) OR $300 (with at least $5,000 total Direct Deposits received during the Direct Deposit Bonus Period). Cash bonus will be based on the total amount of Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 1/31/2026. Full terms at <a href="http://sofi.com/banking">sofi.com/banking</a>. SoFi Checking and Savings is offered through SoFi Bank, N.A., Member FDIC. SoFi members with Direct Deposit can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the 4.00% APY for savings (including Vaults). Members without Direct Deposit will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of Dec. 3, 2024. There is no minimum balance requirement. Additional information can be found at <a href="http://www.sofi.com/legal/banking-rate-sheet">http://www.sofi.com/legal/banking-rate-sheet</a>

This is one of the top accounts we’ve seen, and offers like this can be rare. You work hard, and now it’s time to make your money work for you — with SoFi, you can grow your money with hardly any effort!

SoFi has no account or overdraft fees⁵ Overdraft Coverage is limited to $50 on debit card purchases only and is an account benefit available to customers with direct deposits of $1,000 or more during the current 30-day Evaluation Period as determined by SoFi Bank, N.A. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Members with a prior history of non-repayment of negative balances are ineligible for Overdraft Coverage. and additional FDIC insurance up to $2 million on deposits is available through a seamless network of participating banks.⁶ We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at <a href="http://sofi.com/legal/banking-fees/">sofi.com/legal/banking-fees/</a> ⁷ SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $2M through participation in the program. See full terms at <a href="http://sofi.com/banking/fdic/terms">SoFi.com/banking/fdic/terms</a> See list of participating banks at <a href="http://sofi.com/banking/fdic/receivingbanks">SoFi.com/banking/fdic/receivingbanks</a> Plus, you can receive your paycheck up to 2 days early.⁸ Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

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SoFi is a Member, FDIC. ⁷ SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $2M through participation in the program. See full terms at <a href="http://sofi.com/banking/fdic/terms">SoFi.com/banking/fdic/terms</a> See list of participating banks at <a href="http://sofi.com/banking/fdic/receivingbanks">SoFi.com/banking/fdic/receivingbanks</a>

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You need to check your portfolio every day

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

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.

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