Saving for retirement often means setting money aside and watching your balance grow one contribution at a time. Investing can help those savings grow beyond the money you contribute. But what does investing actually mean? Simply put, investing means using some of your retirement savings to buy a mix of stocks, bonds and other investments.
If investing feels confusing or out of reach, you're not alone. Here are five common investing myths that may be holding you back.
Myth No. 1: "Investing is only for wealthy people."
Reality: Investing can be an option for you at any income level.
You may think investing is people with a lot of money. But you can start while you’re still building your retirement savings and paying for everyday needs. You may not need as much money as you think to get started.
Try using an online retirement savings calculator to compare different contribution amounts and rates of return.
Myth No. 2: "I need to understand everything before I invest."
Reality: You don't need to be a financial expert to get started.
It's normal to feel overwhelmed by investing terms. But you don't need to learn everything at once.
You can meet with a retirement professional who can explain your options in simple terms. They can answer your questions, listen to your concerns and help you choose a path that feels right for you.
Myth No. 3: "Small contributions won't make much difference."
Reality: The amount you contribute matters less than staying consistent.
One reason small amounts make a difference is called compounding. This means the money your savings earns can stay invested and may earn even more money.
Think of it like a snowball that gathers more snow as it rolls downhill. It can build on itself as it goes. Your retirement savings can build from both the money you contribute and any earnings that stay invested. That's why even small contributions matter to the future you want to build for yourself and your loved ones.
Myth No. 4: "The stock market is too risky."
Reality: You can choose your level of risk when investing.
Retirement investing isn't about guessing which stocks will do well or trying to make quick money.
Many people choose investments that spread their money across different companies and choose options based on how much risk they're comfortable taking. The market may rise and fall from year to year, but retirement investing is about focusing on the long term.
Giving your money time to stay invested is often just as important as getting started.
Myth No. 5: "It's safer to keep retirement savings in a regular savings account."
Reality: Savings accounts and retirement investments serve different purposes.
Regular savings accounts are usually to save money for emergencies or short-term needs. Retirement savings plans are for a goal that may be years or even decades away. Because retirement is a long-term goal, investing can help your savings grow over time in ways a savings account alone may not.
The Bottom Line
You don't need a large account balance, expert knowledge or perfect timing to start investing. When you invest for the long term, you give your retirement savings a chance to do more than rely on your contributions alone. That's one of the most meaningful financial gifts you can give yourself and the family you support.