Discover 10 common investment myths and how understanding them can help you build a smarter, long-term retirement strategy.

The Federal Reserve’s 2024 Economic Well-Being of U.S. Households report found that “Sixty-seven percent of adults had assets that are specifically designated for producing income in retirement.” Included within this group were the 60% of adults with tax-preferred retirement accounts such as an employer 401(k) plan, IRA, or Roth IRA.

In other words, investments play a significant role in retirement strategy for many Americans. It’s hardly surprising, then, that in the pursuit of attractive gains, half-truths and misconceptions can emerge. The following 10 myths are commonly encountered and worth further examination.

Myth: Only Wealthy People Invest

There was a time when limited access to financial markets lent more credibility to this claim, but the ever-increasing options for everyday investors have generally made the process cheaper and easier. With index funds, ETFs, and fractional shares, just about anyone can get started.

Contrary to what some believe, small, consistent investments often matter more than any one-time windfall. With more tools at their disposal, almost any investor has the opportunity to follow a disciplined approach focused on growing money over time.

Myth: Timing Is Everything

Despite how some may portray the market, even the most successful investors struggle to predict peaks or tease out troughs. Participation, rather than perfection, is what typically leads to progress over time.

Investors have little to no control over the timing of stock performance, but they can control their own engagement, utilizing discipline, consistency, and patience. History has indicated that time in the market is generally more productive than attempts to time the market.

Myth: Cash Is King—Especially in Uncertain Times

While it’s true that cash can play a role, it’s often susceptible to inflationary forces. An individual with 100% of their assets in cash may slowly lose purchasing power as inflation chips away at the dollar’s value. Over the past 50 years, the average annual return on cash-like assets such as 3-month U.S. Treasury bills has been approximately 4.2%.

Treasury money market funds, for their part, tend to pay out comparable rates, minus fees. These numbers barely outpace the average annual U.S. inflation rate over the same period—approximately 3.7% according to the Official Data Foundation’s inflation calculator, which uses data directly from the U.S. Bureau of Labor Statistics. So, while cash can be useful in the short term, it typically does not help individuals build wealth in the long term.

Myth: Bonds Are Always Safe

Although bonds, especially those backed by the U.S. Treasury, are typically seen as less volatile than equities, they are not immune to risk. Bonds can lose value, too. When rates increase, bond prices fall, and this inverse effect becomes even more pronounced with longer-duration bonds.

The amount of risk depends on the type of bond, the time horizon, and the level of inflation. While it’s hard to argue that bonds have been historically safer than equities in the short term, they are not without some level of exposure.

Myth: The Stock Market Is Like Gambling

There’s a reason casinos earn profits—the house usually wins. Gamblers don’t spend their paychecks because the odds are in their favor. It’s the possibility, however remote, of walking away rich that drives many.

Investing, on the other hand, does not have to be a zero-sum game. While blindly following a “hot tip” might end as poorly as putting it all on red at the roulette table, making informed decisions to broadly diversify funds across typically stable, revenue-generating companies has shown a much higher rate of creating value over successive periods.

Across extended horizons, company stock prices tend to follow their earnings. Short-term plays that ignore long-term fundamentals may increase vulnerability.

Productive investing strategies generally prioritize time, patience, and owning pieces of growing businesses. Many investors aim to replace chance with due diligence and disciplined participation.

Myth: If The Market Is Down, Investors Lose Money

Investors only lock in losses when they sell, so market declines are often temporary for those with a long-term perspective. Yet, many get caught up in comparing their portfolio to its all-time market high, rather than focusing on a more meaningful benchmark: their own personal financial high-water mark. By measuring progress against their individual goals and accumulated wealth over time, rather than fleeting market peaks, investors can stay focused on prolonged growth across sustained intervals—and avoid decisions driven by short-term volatility.

Myth: Past Performance Reveals Everything

As any investor who once selected a plan based solely on last year’s top returns can most likely attest, short-term results reveal only part of the picture. Past performance is worth examination, but not sufficient on its own. Generally, low costs, diversification, risk tolerance, and time in the market combine for a more significant impact on the outcome.

A Morningstar study showed that “The 78 Morningstar 500 funds with 5-star five-year ratings in 2019 returned an annualized 8.35% over the ensuing five years with a below-average 56% relative ranking.” Funds with top ratings often regressed to the mean. This is but one example of why chasing past performance can lead to future disappointment. Be informed, but not blinded by prior outcomes.

Myth: Real Estate Always Goes Up

Real estate is undoubtedly one method many investors employ to help achieve long-term growth. According to Redfin, from 1967 to 2024, the average annual home appreciation in the U.S. was approximately 4.27%, indicating potential long-term appreciation. However, these figures reflect national trends, not local markets. Like stocks, real estate prices tend to move in cycles.

Yes, property is generally a valuable asset, but it’s not a guaranteed winner. Using leverage—borrowing money to invest—can amplify both gains and losses. For example, during the 2008 housing crisis, U.S. home prices fell more than 30% on average from peak to trough, and it took several years for many markets to recover.

Myth: Success Requires Beating the Market

Even if “beating the market” had a universally accepted definition, consistently doing so would be far from realistic. The more pragmatic—and ultimately productive—approach is to build a plan that aligns financial resources with long-term lifestyle goals in retirement.

Indexing is one approach that many utilize, and most retirement plans are constructed around long-term return assumptions well below 10%. In fact, according to the Vanguard Capital Markets Model® forecast, the 10-year annualized return projections for U.S. equities are 3.3% to 5.3%, reflecting conservative expectations commonly used in financial planning (Vanguard, 2025).

So, while expecting to “beat the market” would most likely be a fool’s errand, it may also be unnecessary. The key is having a plan grounded in reasonable expectations and long-term discipline.

Bottom Line: A Happy Retirement Is Not All About Money

While the notion that money plays no role in a happy retirement may sound romantic, it’s a tough sell. The good news is that money is only part of the happy retiree formula.

Research suggests that many of the happiest retirees share a few traits: sufficient retirement savings, a mostly or fully paid-off home, and multiple income streams. Admittedly, meeting those objectives requires hard work and patience, but it falls far short of “impossible.” More significantly, it’s only the financial side of the equation.

Having a thoughtful, authentic lifestyle plan may help retirees reach the happiness levels they desire. Typically, it would value purpose, relationships, and engagement in daily core pursuits —hobbies, interests, and passions that frame each day with meaning. It would prioritize spending quality time with adult children and grandchildren, as well as maintaining a stable social foundation.

Identifying the myths surrounding retirement investing is an effective step along the way to crafting a healthy strategy. But ultimately, money is just a tool. It helps allow for flexibility, peace of mind, and an opportunity to explore. True retirement happiness often comes from how a person chooses to live, not what they’ve saved.

By Wes Moss, Contributor

© 2025 Forbes Media LLC. All Rights Reserved

This Forbes article was legally licensed through AdvisorStream.

Publisher: Forbes

Published: Sept. 12, 2025

By Wes Moss, Contributor