The Top 7 Myths About Investing
- Jul 9
- 8 min read
Investing can be exciting for some people.
I recently spoke to someone who had both a wealth manager and a financial adviser. During the meeting, the wealth manager had to leave early because their team was holding an emergency meeting following a major geopolitical headline.
The response from the person I was speaking to was interesting:
“I would love to be part of that meeting.”
For some people, investing feels exciting. It feels fast-moving, important and full of opportunity.
For others, it feels confusing.
Headlines, social media, market predictions and opinions can feel like waves crashing against rocks before being pulled back out again...
At the start of ocean swimming, there can be excitement. But when the waves keep hitting you, it can quickly become hard work.
Think to when you’re on holiday and walking into the sea for a swim. At the start, it’s exciting and hopefully lovely and warm. But when the waves keep hitting you, it can quickly become hard work.
Investing can feel similar.
People can become nervous. They wonder what risk to take, when to invest, whether to wait, and whether now is the right time. They may hear one thing from the media, another from a friend, and something completely different from social media.
That is why it is worth stepping back to examine some of the most common myths about investing.
Myth 1: Investing Is Only for Wealthy People
This is probably one of the biggest myths about investing.
My first investment was £10 per month into an endowment policy. It was not a large amount of money, but it was still an investment.
Many people are already investors without always thinking of themselves in that way. If you have a workplace pension, for example, your money is likely to be invested.
The key point is that investing is not simply about how much money you have. It is about your goals, your time horizon, your attitude to risk and your wider financial position.
At Castlebay Financial Management, we believe this matters. We do not believe financial planning should only be available to people with a certain level of wealth. The starting point should be understanding someone’s goals, dreams and ambitions, and then helping them take the right steps along that journey.
That is part of The Castlebay Way.
Myth 2: You Need to Time the Market
Trying to time the market is almost impossible.
Of course, social media will often tell you about people who bought at the bottom and sold at the top. Whether it is crypto, Nvidia, technology shares or the latest investment trend, the stories are usually about those who got it right.
What is often missing are the stories of those who got the timing wrong.
If you buy too late, sell too early, or chase something after it has already risen sharply, your experience can be very different from the headline return.
Another issue with timing the market is that it often leads people to chase a few investments. That can increase risk, especially if the person does not fully understand what they own.
A better focus is usually:
Time in the market
Diversification
Discipline
Long-term planning
For Castlebay, successful investing is often less about predicting the next headline and more about staying disciplined through different market conditions.
Myth 3: Cash Is Always Safer Than Investing
Cash has an important role.
Everyone should think about short-term needs, emergency funds and money they may need to access quickly. For these purposes, cash can be very sensible.
But cash is not always risk-free.
Many years ago, I knew someone who held over £100,000 in cash. This was around 2009. Each year, they waited for interest rates to rise.
Eventually, interest rates did rise. But by then, many years had passed. When you factor in years of low interest rates and inflation, the real return on that money was negative.
That does not mean cash is bad. It means cash needs to have a purpose.
If short-term funds are needed, holding cash can be sensible. But if money is not needed for many years, waiting for the “right time” to invest can become a decision in itself.
In some cases, the risk is not market volatility. The risk is that inflation gradually reduces the spending power of your money.
Myth 4: Higher Risk Always Means Higher Return
Higher risk does not guarantee higher return.
It only means the range of possible outcomes is wider.
In the 1990s, double-digit investment returns felt normal in some market segments. Some shares delivered significantly more than that. This helped fuel the dot-com boom, but it also led to the dot-com bust.
We can see similar behaviour today.
Certain investments can capture attention because of the returns they have delivered or the stories behind them. Whether it is high-growth technology companies, private companies, crypto assets or other speculative areas, the potential reward can look attractive.
But the risk can also be significant.
The real issue is not whether an investment has done well in the past. The real issue is whether you understand what you are investing in, why you own it, and the level of risk you are taking.
Understanding your own journey and what you are comfortable with is more important than chasing something that may not deliver in the future.
Myth 5: Past Performance Tells You What Will Happen Next
When I first started in financial services, one-way people looked for investments was by checking performance tables in the back of a newspaper.
The problem is that human nature often leads us to chase what has already done well.
Past performance can be a useful context, but it is not a promise of what will happen next.
There are many examples of investments that performed strongly for a period before struggling. Neil Woodford’s time managing the Invesco Income funds in the early 2000s is one example many people in the industry will remember. There was a period of very strong performance, but later performance became more difficult.
Many investors may have been attracted by the past performance without fully understanding the underlying investment approach.
Another example is Scottish Mortgage Investment Trust. It has delivered exceptional returns over certain periods, but it has not always been plain sailing. It also carries risks that some investors may not fully understand, including exposure to higher-growth companies and unlisted investments.
The point is not to say whether these investments are good or bad.
The point is that research matters more than past performance.
Before investing, it is important to understand:
What the investment owns
How it works
What risks are being taken
How it fits within the wider plan
Whether it remains suitable for your goals
Past performance may tell you what happened. It does not tell you what will happen next.
Myth 6: Investing Should Be Exciting
I have learnt the hard way that if investing feels too exciting, something may be wrong.
Excitement can make the highs feel better, but it can also make the lows feel far worse.
Good investing is often quite boring. That does not mean it is easy. It means it should be patient, disciplined and repeatable.
There is a bridge that always seems to be painted. The painters start at one end and, by the time they reach the other, they have to start again.
That is a useful way to think about investing.
It is not about constantly chasing something new. It is about maintaining the plan, reviewing it, adjusting where needed, and accepting that the work is ongoing.
The aim of investing is not to win every short-term argument. It is to build a plan that can support your long-term objectives.
Myth 7: You Can Set and Forget Your Investments Forever
Some people start with the investment rather than the plan.
At Castlebay, we believe it should be the other way around.
The plan should come first. The investments should then support the plan.
Long-term investing does not mean ignoring everything once the money is invested. Reviews matter because life changes.
Your plan may need to change because:
Your goals change
Your retirement date changes
Tax rules change
Family circumstances change
Your attitude to risk changes
Markets change
Your income needs change
We are advocates of ongoing advice because we believe the value of advice often lies in the relationship, the review process, and the ability to adapt the plan over time.
But we also understand that not everyone is ready for full ongoing advice. Some people may be at the start of their journey. Others may need help with a specific decision before deciding what comes next.
The important point is that investing should not sit in isolation. It should be connected to your wider financial life.
What Investors Should Focus on Instead
Whether we are swimming in the sea or investing for the future, it helps to understand the conditions before we move forward.
With investing, that means thinking carefully about:
Clear goals
Suitable risk
Diversification
Costs
Tax allowances
Behaviour
Regular reviews
A financial plan, not just a portfolio
The best investment strategy is not always the most exciting one. It is usually the one that gives you the best chance of staying the course.
Final Thoughts
Investing does not need to be complicated, but it does need to be understood.
At Castlebay Financial Management, we believe investing should sit within a wider financial planning journey. The aim is not simply to own investments, but to understand what they are there to help you achieve.
The next time you enter the sea and feel the waves crashing around you, it may be worth pausing before fighting every wave.
Investing can be similar.
Sometimes the most important thing is not reacting to every headline, but understanding where you are, where you want to get to, and how your plan is designed to help you move forward.
Frequently Asked Questions
Is investing better than saving?
Investing and saving have different purposes. Saving is usually more suitable for short-term needs, emergency funds and money you may need to access quickly. Investing is usually considered for longer-term goals where you have time to accept market ups and downs. The right balance depends on your circumstances.
How much money do I need to start investing?
You do not always need a large amount of money to start investing. Many people begin with workplace pensions, regular savings plans or small monthly contributions. What matters most is whether investing is suitable for your goals, time horizon and attitude to risk.
Can I lose money by investing?
Yes. The value of investments can fall as well as rise, and you may get back less than you invest. This is why it is important to understand the level of risk you are taking and whether it is suitable for your financial plan.
How long should I invest for?
Investing is generally better suited to medium- to long-term goals. This is because markets can rise and fall over shorter periods. The longer your time horizon, the more time you usually have to recover from short-term market volatility.
Should I invest without financial advice?
Some people are comfortable making their own investment decisions. Others prefer advice because they want help understanding risk, tax, investment options and how everything fits together. Financial advice can be particularly valuable when your circumstances are more complex or when you are making important decisions about retirement, pensions, inheritance or long-term planning.
Last reviewed: July 2026
Important information
This article is for general information only and does not constitute financial advice. Financial planning and investment decisions should be based on your individual circumstances. Tax rules and legislation can change, and their impact will depend on your personal situation. If you would like advice tailored to your circumstances, please speak to a qualified financial planner.
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