Any serious investor would have a mix of the following investments in his or her portfolio: savings and checking accounts, mutual funds, bonds, and of course, stocks. Public interest in stock investment has risen dramatically over the last couple of decades when it used to be an affair exclusively for those who are affluent. People are attracted to investing in the stock market because it is one of those places where they can earn money without actually having to be there. Unlike putting up a business where a lot of time and effort are required for it to work, trading in stocks can give high returns with only little physical involvement from the investor.

Now this is where the misconceptions and mistakes come in. As the interest in investing in the stock market spreads like wildfire, the necessary knowledge does not pass on to other people as quickly. Refrain from believing in the following misconceptions so that investment mistakes that can become quite costly can be avoided.

A common misconception is that the stock market is a get rich quick scheme. Some people believe that they can easily make their money grow if they merely follow the stock market motto of “buy low, sell high”. If only it were that easy. Truth is, the stock market is so finicky that it is very difficult to predict market turning points. Even for advisors and veterans in the business, timing the market on when to buy and when to sell proves to be a big challenge. With information being widely accessible to more of the populace than ever before, the millions of people who trade stocks every second of every day make accurate market predictions seem next to impossible.

It may sound like investing in the stock market is a waste of time because of its unpredictability. Some people think that the stock market is too risky but don’t be turned away by this. Reduce your risks by having clear goals before going into any trade. Stick to these goals and don’t become greedy. Use a system in buying and selling stocks. Change your system and strategy based on the stock that you are trading because there is no foolproof system that will work 100% of the time.

Some people also believe that the saying “what goes up, must come down – and vice versa” applies to the stock market. Do not buy stocks simply because they are cheap and think that they will eventually rise. There is a reason why stocks in that company are trading very low and it could be anything from poor management to a bad product recall. It is important to know the background of the stocks that you are trading. Sometimes, an expensive stock could also be well worth the money if it continues to trade at higher prices than when you initially bought it.

Trading in the stock market may not require your physical presence but it helps immensely if you keep yourself up to date and well-informed. Keep away from these common pitfalls so you can minimize your losses and the stock market can become a great source of passive income for you.