International comparisons show every year that only a few people in Europe own shares. But why do shares have such a bad reputation in Germany? Scientists have been investigating this question for years. In the process, researchers repeatedly come across myths that surround stock market trading and unsettle potential investors.

1. investments in shares are always risky

This assertion is contradicted by a long-term study conducted by the London Business School in cooperation with the Credit Suisse Research Institute. The study looks at the international stock markets over a period from 1900 to 2020. In these 120 years, the inflation-adjusted return on equities globally amounts to 5.2 percent per year. Massive crises such as the world wars and the world economic crisis of 1929 do not change this. Even the recent financial crises in 2000 and 2007/2008 do not have a dramatic effect on the average return of shares, according to this study. In the same period, investors in government bonds receive an average return of two percent. Holders of treasury bonds receive a return of just 0.8 percent.

These figures show what opportunities the stock market can offer. Compared to government bonds, shareholders' capital has doubled in some cases during the period under consideration.

2 The stock market is only for speculators

Many people imagine that investing their savings in shares is complicated. They are convinced that they have to keep a constant eye on share prices. Worrying about their money robs them of sleep because they constantly fear losses. In some cases, they assume that only a short-term sale of the securities can save them from this. But many shareholders remain calm on the stock market and benefit from long-term increases in value.

3. buying shares is purely a matter of luck

Those who hold this view would be better off visiting a casino. Many successful stock market experts owe their profits to a well thought-out strategy. Even as a beginner, you should develop a viable plan for your share investment. It is crucial to check the success of this strategy at regular intervals in order to be able to make corrections in time if necessary.

4. Profits with shares require constant changes

The opposite can be true. If you choose a portfolio with shares of safe companies in https://exness-vietnam.asia/trader-app/, patience can be the right virtue. A stock market adage is, "You don't sell good stocks." Even if a "good" stock shows short-term losses, it may recover in the medium term and return to profits in the long term.

5. dividends are too low

Dividends allow shareholders to participate in the profits of companies. In absolute terms, the profit shares sometimes seem small. What is worth noting, however, is the personal dividend yield, which is calculated from the share price performance and the dividend. This is shown by the following example:

    Purchase price of the share: 20 euros
    Current market value of the share: 50 euros
    Dividend: 2 euros
    Dividend yield: 4 per cent (based on the current share price)
    Personal dividend yield: 10 per cent (based on the investment amount of 20 euros)

If you look at the interest on a savings account for comparison, you will often find a yield of far less than one percent. What do you think about the myths surrounding share ownership? Just share your experiences with our readers!

Conclusion:

    Shares can offer significantly higher returns than other forms of savings and investment.
    You don't have to sell shares immediately if the share price falls.
    Patience can be an important virtue on the stock market.