Wealth column:5 financial advice myths busted
Throughout our careers we've heard our fair share of bad financial advice. We'd bet you've had some handed to you as well. Maybe it was a well-meaning friend, a relative or someone in the financial industry who at first appears to have your best interests in mind.
It's not always easy to sort the good advice out from the bad, so we've put together a list of financial advice myths that need to be busted before they land your accounts in the red.
1. Investing in [this] is a "sure thing."
We're pretty sure you've heard the saying "Anything that sounds too good to be true probably is." The same goes for investing. Sure, we'd all like to double our money year over year on all of our investments, but that's just not realistic. Anyone who tries to convince you otherwise is either misguided, or there's likely something in it for them. Be wary of any advice that sounds like a sure thing.
2. Hot stocks make the most money.
While investing a stock that is doing well can earn interest in the short term, in general, those options are hard to pin down and probably aren't going to help you in the long run. We believe having a portfolio that's diversified by asset classes and risk factors is the best way to potentially maximize returns and minimize risks over the long run.
3. All debt is bad.
All our lives we've been told to avoid going into debt. And for good reason. Credit card debt, or other forms of inefficient debt, can be a huge financial burden. However, if that debt is going to actually earn you money in the long run, it may be worth the price you're paying now. For instance, if you are paying off a home mortgage, your home's value years later could end up being more than your principal and interest payments. This kind of efficient debt can actually make you more money over the long run than simply sitting on cash that you hadn't otherwise invested.
4. Wealthy people give the best financial advice.
Whenever you hear financial advice, you must consider the source. Have they been successful financially? Do they have your best interests in mind? Is there anything they would get out of you following their advice? These are just a few of the questions to ask yourself when getting financial advice. Remember, just because you're best friend or older brother told you investing in their new business venture was a good idea, doesn't mean it is. Always do your research before investing your money in anything.
5. All financial advisers will help do what's best for you.
It's easy to assume that all financial advisors are working to do what's best for you. That's why you hired them, isn't it? However, keep in mind that only financial advisors held to the fiduciary standard are required to act in your best interests. Make sure that you are choosing an advisor who truly understands you and your values. With the right fiduciary financial adviser, you can pursue your goals and feel confident about your financial future.