Myths holding you back

Here are the 6 Money Myths Holding You Back – and How To Debunk Them


Myths holding you back

Money is enigmatic.  It means different things to different people.  Different ways to save, different ways to budget.   However, our culture shares some common misconceptions when it comes to money.

These misconceptions, or myths, are so ingrained that it’s often buried in our subconscious.  Most of them are never really questioned, they are taken as “just thing way things are”.

But are they?

Common Money Myths

1. I don’t have enough to invest.

Many say – oh, it’s just a couple of hundred dollars or a couple of thousands of dollars.  It’s not worth it to invest; no financial advisor would take me on.  This myth might have been true a decade ago, but technology has made  this as extinct as dinosaurs.

With the invention of the Index Fund, Exchange Traded Funds and Robo-Advisors now is a great time for a smaller investor. In the case of Robo-Advisors and Index Funds, we can invest in a diversified portfolio with a couple of dollars.  Even better, we can make regular deposits and have that invested for us with very little fees.

Before the advent of the Index Fund, the ETF and Robo-advisors, it did take a chunk of money to get investing.  As we know, it’s risky to just invest in 1 stock in case it goes belly up.  We needed to invest in a “well diversified” basket of stocks.  That generally meant at least 15 stocks.

It was generally those better off that did the investing because they could afford to put up the funds to buy 10-15 stocks.   This led to many of us to believe:

2. Investing is for the rich and not for “people like me”.

This mindset is something we have to change. Have you ever read the average millionaire has 6 or 7 streams of income? For you and me to be a millionaire, we need another stream of income besides our 9-5.  Investing is the simplest path to start another stream of income in just a few months.

By investing in dividend-paying stocks, companies will start paying YOU a portion of their earnings.

Actually in my view,  investing, especially in financial assets, is the most effective way for everyday people like you and me to participate in the distribution of wealth generated from our labor productivity gains.

Put another way – you know all that cost-cutting your company did last year and how your workload doubled, yet your pay didn’t go up? And how that happened to basically everyone you knew?  By investing in the stock market, we can get back a little bit of the productivity gain that we produced for the company.  It’s not the perfect answer to workforce imbalance, but it’s a start.

3. Investment products are “free”.

When people do start investing, another myth is when advisors tell them that they don’t “pay anything” for investment products.  You saw someone for free at the financial institution and they did a financial plan for you and got you all set up in a portfolio.  And they claim you weren’t charged for these services.

Yes, these employees are paid by the company and therefore they didn’t give you a bill for their work. But all of that is priced into the product before you even see it.  Just like the cost of packaging and shipping is priced into the canned tomatoes or boxed cereal, the cost of running the fund and paying the employees are priced into the fund.

The industry has done such a great job of embedding fees within products, most consumers don’t know the true costs. Funds have Manager Expense Ratios (aka MERs, aka fees) and some even have a trailing commission that is paid to the person who set you up with the plan. And if you invest in a fund that holds other funds – there’s an extra layer of fees!

Reducing fees has an exponential impact on investment gains and therefore financial growth.

4. Investing means you have to be the typical 1980’s stockbroker;

You know the stereotype – Person with shoulder-padded suit yelling “Sell!” and “Buy!” into a brick cellphone. Picture that episode of Friends when Pheobe was a high powered stockbroker.

Many people think it takes a lot of time and that timing is everything. That’s what all that buying and selling is about, no?

But investing is actually a long term pursuit.  Warren Buffett famously said that the stock market is a device for transferring money from the impatient to the patient.  So a real investor is patient and doesn’t do much buying or selling in the short term.

No need to call up anybody to “sell” or “buy”.

5. You can take emotion out of investing

Along the lines of the terrible suit, that stockbroker is emotionally crass and insensitive. The myth is that good investors are also callous and tough.

People fool themselves that they can take the emotions out of investing.  How many articles have you seen that says “emotions has no place in investing” or something along those lines?

This is a complete fallacy.  Money is incredibly emotional.  If you don’t think so, try talking about your budget at your next office meeting. You feel the emotional vulnerability right away.  You can’t take emotions out of investing because you are human. You have feelings about almost everything; dinner, the gym, certain TV shows, traffic, red cars.

Why would money be any different?

The trick is not denying your feelings, but to learn how not to react to every emotion you feel.  The objective is not to become an economic robot, but to develop appropriate responses to emotions.

I remember reading “Tuesdays with Morrie” and Morrie tells the author to just feel the feelings and in doing so, these feelings can pass.  They wash over him and then can go out like the tide.

People who think they are not emotional when it comes to investing are lying to themselves. What they are doing instead is to repress their feelings. We all know those bottled up feelings will blow up sooner or later and in unintended ways. (Hello, every stock market crash ever)

6. My Dad/Husband/Boyfriend is better at this sort of thing

In addition to the false notion that men are better at math, I think this myth is born because we thought we could take the emotion out of investing and money.  For so long, women were labeled “emotional” or “high strung” (we still are called that I’m well aware). Naturally “good with money” “good with numbers” and “unemotional” didn’t fit into how we viewed women. But as we can see, all these assumptions are wrong.

Men don’t have any fewer feelings than women.  They have learned not to show it since that’s what our society demands of them. Women aren’t automatically emotional and high-strung as a result of gender.  Both genders are equally adept at learning how to control a reaction to an emotion.

I think the pressure that men feel in our society, to always be strong, to not show emotion, leads to them white-knuckling many areas including investing. In our society asking for help is looked upon as weak, especially for men.

I think the “better at or know more” is actually divided not along gender lines, but rather along socio-economic lines.  I argue that children of the wealthy know more about investing, male or female, whereas men from lower economic strata are equality disadvantaged in this knowledge as their female counterparts.

Fathers may sometimes know more about investing compared to you or me only because they have more years of experience. But it certainly doesn’t mean it is beyond our grasp. And really, how will we help our kids with investing if we don’t start gaining those years of experience now?


These are just some of the most common myths I hear in my day-to-day.  My mom often says she “doesn’t have enough to invest”, but she never really stops to think how much is “enough”.

My professional girl-friends admit to me that their dad or husband take care of their investments.  Their dads have more experience and are better at it.

Online, I read women say that they just go with the advisor their parents are with because they don’t charge them “as a favor to their parents”.

In a networking event, a woman dismisses her initiative of opening up an account with a robo-advisor as not “really investing” because she’s not buying or selling stocks.

And from every financial institution, they advise their clients to “take the emotion out of investing”.  So many articles are written about our psychological biases that we fall into when investing.  And they use these as weapons to battle against emotions.  But what about using these as tools to help us accept our feelings instead? Wouldn’t that be more productive?

Have you heard any of your friends or family say any of the above?  How about you? Do you think any of these are true?  If so, comment below and share them with me.  It’ll help out other readers to know that what they have been lead to believe is common.

Lastly, please subscribe to this site as we explore how to be an emotional investor in the coming weeks.

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