No matter where you look, you’ll find that financial advice is always on offer. From TV adverts and online webinars to family and friends, it seems everyone is trying to tell you what to with your money. However, it’s essential to separate the wheat from the chaff when it comes to deciding which advice to follow. To get a head-start, take a look at the common financial advice that you may be able to ignore.
Myth 1: Debt Is Always Bad
Debt, in itself, isn’t always a negative thing. In fact, very few people can get through life without getting into any type of debt. Taking out a student loan to further your career or securing a mortgage so you can purchase a property can be a valid way to improve your long-term finances while being in debt, for example.
However, if debt becomes unmanageable, then it can certainly be a negative thing. Making minimum payments on credit cards as the total owed continues to climb will quickly lead to a debt spiral, for example, and should always be avoided.
Myth 2: Avoid High-Risk Investments
If you have extra savings at your disposal, investing the funds can be an effective way of increasing your capital. Many people will warn you against making high-risk investments, but this may not be the right decision for you. Higher risk investments, like FOREX, trading cryptocurrency on a registered Ethereum exchange, or venture capital can offer extremely high returns. Although they do carry a high risk, this is balanced by the potential returns you can generate, often in a short amount of time.
Providing you understand the risk you’re taking, and you’re prepared to take a loss if you have to, high-risk investments aren’t inherently bad. In fact, they can be a viable way of diversifying your investment portfolio and balancing the overall level of risk.
Myth 3: You Need to Live Frugally
Being sensible with your money can certainly be great advice but you don’t need to live frugally at all times in order to be financially secure. There are times when reducing your expenditure too much can lead to increased costs in the future. If you’ve ever heard the expression, ‘buy cheap, buy twice’, you’ll know exactly what we mean.
If you need to buy a new dishwasher, for example, selecting the cheapest model might seem like you’re saving money. However, if it’s of lower quality and has a relatively short lifespan, you’ll end up needing to purchase another appliance relatively quickly. In contrast, spending a little more on a better quality model now could increase the longevity of the unit.
Knowing when to splurge and when to save is a savvy money management skill, so make sure it forms part of your financial strategy.
Getting the Right Advice
Everyone’s finances are different, which means it’s important to get personalized financial advice. By talking to a financial advisor or investment manager, for example, you can access the bespoke advice you need to help you make the right financial decisions for yourself and your family.
