10 Money Myths

MYTH 1: To buy a home, you need to be in great financial shape.
FACT: Buying a home is about cash flow, not assets, so if you can pay your rent, you can probably pay a mortgage.

MYTH 2: You should pay off their debt as quickly as possible.
FACT: Sometimes you get so focused on paying down debt, that you forget to maintain a cash reserve . . . so when the next emergency strikes, you end up using credit again. 

MYTH 3: It’s better to get a tax refund than to owe money to the IRS.
FACT: You’re afraid of the IRS, so you over withhold.  Or, you’re afraid of being audited, or of paying penalties . . . all worse case scenarios. 

MYTH 4: Young people don’t need any kind of insurance.
FACT: One of the biggest mistake you can make is not adequately protecting yourself, especially in the case of health insurance.

MYTH 5: Good investments always beat the market.
FACT:  No one investment can consistently beat the market, and the strategies that focus on that aren’t long term.  A good investment may simply consistently give you 7% 

MYTH 6: Everyone needs a diversified portfolio of multiple investments.
FACT: If you’re just starting out, you need to keep things simple.  One mutual fund may provide plenty of diversification for many people who are trying to build their assets.

MYTH 7: Investment selection is the key to getting rich.
FACT: Habitual saving will beat market returns every time.  The greatest investment in the world won’t make up for not saving enough.

MYTH 8: Early retirement is the ultimate goal for most people. 
FACT: Retirement will not look the same in 20 years as it does for baby boomers.  You’re going to live longer, shift careers more often, and probably have more life balance prior to retirement. 

MYTH 9: A will is the most important estate planning tool.
FACT: A will simply carries out your wishes and decisions after your death.  Equally important are the estate documents that carry out your wishes and decisions while you’re still alive, such as a power of attorney or health care directives.

MYTH 10: I’m young, I don’t have to worry about incapacity issues
FACT: What about your aging parents or grandparents?  The baby boomers have seen how costly and draining elder care is.  So if your family doesn’t have a plan, it may affect your finances negatively.