Three Investing Myths – Debunked

By Wayne Mulligan, on Thursday, June 23, 2016

When it comes to investing, we’ve been lied to for nearly a century.

We’ve been told that if we take the investment path that’s “tried and true,” we’ll be able to retire comfortably, right on time.

But this couldn’t be further from the truth.

And today I’ll prove it to you.

Myth #1 — “Work, Save, Invest, Retire”

Ever since I was a kid, my parents told me that all I had to do was get a good job, save my money, and invest it wisely.

If I did all those things, I could own a nice home, support a family, and retire comfortably.

But that advice sure didn’t work out for them.

Yes, they saved—but with rising living costs, unexpected medical expenses, and paltry stock market returns, they don’t have much to show for it.

I know this is true, because I’ve had to step in and lend them money.

It must have been difficult for them to have worked so hard, to have “played by the rules”—and still, they had to ask their son for money.

And I imagine that many Crowdability readers have faced similar situations.

With the stock market’s lousy returns, and with the cost of living continuing to rise, it’s next to impossible to grow your nest egg simply by investing in stocks.

Most of us don’t really start saving for retirement until we’re in our 40s. We know we should start earlier, but life is expensive when you’re just starting out—buying your first house, raising children, paying off student loans.

But the end result is that, if we’re trying to retire by the time we’re 65, we only have about 20 years to build up a decent retirement account.

So let’s say you can only save a few thousand dollars a year. If you put it into the market and earn 5% per year, after 20 years, you’ll have roughly $100,000.

$100,000 is a lot of money—but it’s not enough to retire on.

Which brings me to...

Myth #2 — “The Professional Money Manager”

Once folks realize they’re behind the retirement 8-ball, they start looking for help.

Often this means turning to a financial advisor, stockbroker or other form of “professional” money manager.

I put the word “professional” in quotes because I wouldn’t consider most of the financial advisors I’ve met professionals.

Let me explain.

I consider Michael Jordan to be a professional basketball player. And I consider Mike Tyson to be a professional boxer.

If you put Jordan on the court with high school kids, he’d dunk all over them.

And if you put Tyson in the ring with amateurs, he’d knock them out cold.

But if you put a “professional” money manager up against the market averages—or up against a monkey throwing darts at stocks—you’ll quickly realize his deficiencies.

In fact, a recent study from Goethe University determined that the “… involvement of financial advisors is found to lower portfolio returns.”

But once we realize the pros are full of hot air, some of us still keep trying…

Myth #3 — “The Stock Market Guru”

For example, maybe you found a research service or newsletter that promises to help you make windfalls of cash.

Well, there certainly are some high-quality services out there. But have any of the ones you’ve subscribed to consistently helped you beat the market?

Have any of them put you in a position to retire early, or to live more comfortably?

If you’re still reading this, I’m guessing your answer is “no.”

But here’s the thing...

It’s Not Your Fault (or Theirs)...

It’s not your fault you haven’t made good returns.

And it’s not the fault of the money managers or “gurus” either.

The problem is that all these different investment options are fundamentally flawed:

They’re all based on investing in the stock market.

The truth is, today’s stock market is no place to build wealth.

I’m not saying you should sell all your stocks. Personally, I keep a chunk of money in low-cost index funds. That’s a great way to get consistent, conservative returns.

But those returns are too low to help you build a substantial nest egg.

To build a big nest egg, you need a way to generate large returns...

Large enough so you can start with just a small amount of money…

And grow it into a sizeable portfolio.

The Private Stock Market

As Matt explained yesterday, once he ditched the stock market, he was able to make more money—in less time, and with less effort—than he ever did before.

This left him with a bigger bank account, the ability to “retire” early, and with more time to enjoy the money he’d earned.

And it was all thanks to his investments in early-stage, private companies.

That’s why Matt and I have made it our mission here at Crowdability to help regular, individual investors do the same thing.

We do that by providing you with education and research on the private markets.

We aim to be your guide as you enter this new space.

We’ll help you avoid making mistakes, and we’ll help you make better—and more profitable—investment decisions.

To that end, we’d like to hear from you on how we could be even more helpful.

So please comment below and leave us your thoughts...

Let us know your top one or two questions about investing in the private markets, and we’ll do our best to answer them this week.

Here’s to your future investment success.

Best Regards,
Wayne Mulligan



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Tags: Early-stage Investing Stock Market

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