The Biggest Myths About Online Investing Debunked

• by Katie Crawford
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Myth 1: You Need a Lot of Money to Start Investing

Many people think you need $5,000 or $10,000 just to get into the stock market. That used to be true-back in the 1990s, brokerage accounts often required big minimums. But that’s not the case anymore. Today, platforms like Fidelity, Charles Schwab, and Vanguard let you open an account with $0. You can buy a single share of Amazon or Apple for under $100, or even invest $1 in a fraction of a share. That’s right-$1. You don’t need to wait until you’ve saved up a fortune. In fact, a 2023 Charles Schwab survey found that 73% of current investors started with less than $1,000. People who begin small and stay consistent often end up with more than those who wait for the "perfect" time.

Myth 2: The Stock Market Is Too Risky

If you look at day-to-day prices, yes, the market swings. But if you look at the long term, it’s one of the safest ways to grow money. From 1928 to 2023, the S&P 500 returned an average of 10.17% per year. That means if you put $10,000 in the market in 1990, it would have grown to over $407,000 by 2023. Compare that to a savings account earning 2% a year: your $10,000 would’ve only become $18,114. The difference isn’t even close. Market drops happen-2008, 2020, 2022-but every time, the market recovered. People who sold during those dips lost out on the bounce-back. Staying invested through volatility isn’t just smart-it’s how most people build real wealth.

Myth 3: Investing Is Just Gambling

Some people say buying stocks is like playing the lottery or going to Vegas. It’s not. Gambling has a built-in house edge. In a casino, you’re expected to lose money over time. The stock market doesn’t work that way. Over the past century, it’s delivered positive returns for those who held on. Fidelity found that investors who stayed in the market through the 2020 crash earned 60% returns by 2023. Those who panicked and sold missed it all. Investing isn’t about guessing which stock will spike tomorrow. It’s about putting money into broad market funds-like an S&P 500 index fund-and letting time do the work. That’s not luck. That’s math.

Myth 4: You Need to Be a Finance Expert

You don’t need to read balance sheets or understand P/E ratios to start. Most successful investors don’t. Robo-advisors like Betterment and Wealthfront manage over $150 billion for 2.5 million people. These platforms ask you a few simple questions-your age, goals, risk tolerance-and then build and manage a portfolio for you. No experience needed. Even Vanguard’s most popular option, the Target Retirement Fund, does everything automatically. You pick a fund based on when you plan to retire, and it adjusts over time. One Reddit user started with $200 a month in a Vanguard Target 2060 fund and turned it into $47,000 in five years. That’s not magic. That’s simplicity.

Myth 5: You Can Time the Market and Beat It

Everyone thinks they can buy low and sell high. The problem? No one can do it consistently-not even professionals. DALBAR’s 2023 study found that over 30 years, the average investor earned just 4.99% annually from stock funds, while the S&P 500 returned 10.16%. That gap? It’s because people panic-sell during drops and rush back in after prices rise. The market’s biggest gains often come right after the worst days. In March 2020, the market dropped 34%. By December, it was up 65%. Those who got out missed the entire rebound. The real secret? Time in the market beats timing the market every time. Set up automatic contributions and forget about it.

Myth 6: Active Investing Beats Passive Investing

Ads for hedge funds and "hot stock picks" make it sound like you need to be a stock picker to win. But data says otherwise. Vanguard’s research shows that over 15 years, 80% of actively managed mutual funds underperformed simple index funds. Why? Fees. Active funds charge 1-2% a year. Index funds charge 0.03%. That difference adds up. A $10,000 investment in an active fund with 1.5% fees over 20 years could lose you over $12,000 compared to a low-cost index fund. Even Morningstar found that someone who invested $500 a month from 2000 to 2023 ended up with $227,000 using index funds. That’s $75,000 more than someone who tried to pick winners.

Myth 7: It’s Too Late to Start

People think if they didn’t start in their 20s, they’ve missed the boat. That’s false. Compounding works even if you start later. Let’s say you’re 40 and start investing $300 a month. Even with modest 7% returns, you’d have over $300,000 by 65. That’s not life-changing money? Think again. And you don’t need to invest more than you can afford. The average successful investor contributes 10-15% of their income. That’s $500 a month on a $4,000 paycheck. You can start small. You can start now. The best time to begin was 10 years ago. The second-best time is today.

What Actually Works

Here’s what separates people who succeed from those who don’t:

• Automate it. Set up automatic transfers from your checking account to your investment account. 82% of people with long-term success do this.
• Keep it simple. Use a target-date fund or a three-fund portfolio (U.S. stocks, international stocks, bonds). No need for 10 different apps.
• Ignore the noise. News headlines, TikTok stock tips, and Reddit hype don’t build wealth. Consistent investing does.
• Stay the course. If you invest through downturns, you’ll come out ahead. Most people who fail do so because they give up too soon.

Platforms like Fidelity and Schwab offer free educational tools, and the SEC’s Investor.gov has clear, unbiased guides. You don’t need a financial advisor to start. You just need to begin.

Why This Matters

People who invest have 17 times more wealth than those who don’t. The median net worth for investing households is $1.24 million. For non-investors, it’s $71,600. That gap isn’t because the wealthy are smarter. It’s because they started early and stayed consistent. The myths holding you back are outdated. The tools are here. The data is clear. You don’t need to be rich. You don’t need to be an expert. You just need to start-and keep going.