Investing myths: Separating fact from fiction in investing

April 18, 2023

Investing is an important part of your financial plan but investing myths can get in the way. These tips can help you uncover the reality of investing.

You’ve worked hard for your money, so it’s important that you have a solid financial plan that will help protect your wealth. Your investment strategy is a large part of that plan—and a smart strategy takes research and thoughtful decision-making. 

Unfortunately, there are some misconceptions about investing that can slow you down. To identify the money moves that are right for you, let’s debunk three common investing myths. 

Investing myth #1: Saving should be a higher priority than investing

The truth is that putting money away for the future in both saving and investment accounts is an important part of a financial plan. The question is, then, how to find the right balance of each. That answer will come down to timing: When might you need the money? 

  • Five years or less: A savings account is a good vehicle for your emergency fund and short-term financial goals, such as saving for a house, wedding or vacation. Savings vehicles include basic savings accounts, short-term CDs and money market accounts, all of which allow easy access to your funds while your money potentially earns interest. Up to $250,000 in these accounts is also insured by the Federal Deposit Insurance Corporation (FDIC).
  • More than five years: If you won’t need the money for a while, investing can be a good strategy. It’s a long-term play, giving you the potential to earn higher returns through the power of compounding. You can choose from a range of investment accounts and investment vehicles

The type of investment vehicles you choose will depend on your age, risk tolerance and time horizon. For example, younger working people may tolerate higher-risk investments, such as stocks, because they have time to withstand market fluctuations. Someone nearing retirement, however, will want to look for lower-risk investment vehicles, such as bonds.

Investing myth #2: Investing always comes with high fees

The truth is that investment fees will vary depending on how you choose to invest and what you invest in. You should be aware if fees start affecting your rate of return and your financial goals. 

Fees typically accrue for the handling of your assets or for the expertise required to manage the portfolio. For example, mutual funds charge expense ratios to cover management costs, while retirement accounts may come with a custodial fee to compensate for satisfying IRS reporting regulations. 

Fees can be visible and invisible. A visible fee will be a line item on a statement, such as a commission on a trade. An invisible fee, however, is reflected in the value of the asset and isn’t a standalone figure on a statement. One example of an invisible fee is a “sales load” investors pay to purchase or sell a mutual fund, which is deducted directly from the investment.

While fees are hard to avoid, you can potentially reduce them by investing on your own via self-directed investing or by investing via a robo-advisor. These investment strategies usually incur fewer fees. However, paying for a professional’s expertise and time with an actively managed fund has the potential to increase your rate of return over the long run.

Investing myth #3: You need to work with a financial professional to invest

While a professional can be a valuable partner for developing your investing strategy and identifying new opportunities, working with one is certainly not required. 

That said, if you have a sizeable amount of money to invest, have complex goals or want more guidance than simple investment management, it’s probably best to work with a financial professional who will tailor your plan to your situation.

If you’re new to investing or prefer to invest independently, you could consider a robo-advisor. These digital tools provide investment services rooted in automation and algorithms. 

To get started with a robo-advisor, you’ll typically answer some basic questions, such as, “How much do you want to invest?”, “What are your goals?” and “What level of risk are you comfortable with?” The robo-advisor analyzes your answers and builds a customized portfolio with a mix of funds that meet your criteria. A robo-advisor is a handy tool if you want a more hands-off approach to investing. It may manage your portfolio for you, including regular rebalancing of investments in response to market changes.


Not sure where to start? Take the investing options quiz offered by U.S. Bancorp Investments. Answer a few simple questions. Review your options. And then consider which path forward makes the most sense for you.

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