There is plenty of information we keep on hearing and mistakenly take it as truth. Well, some of it surely is, but what about the false parts? There’s also the fact that some of those ideas and beliefs were true at some point but as the world changes, they got overturned. Unfortunately, they may still misguide us and contribute to the poor decisions we make every day. On of the fields that might influence us in the gravest way is the finances. Some of the advice you can be hearing are myths that have been dissipated by money experts. Let’s take a look at them so you know which to avoid – you will be shocked!
- Bank Is the Best Place to Keep Your Money
Since the evolution of the modern banking system, many people believe that banks are the best places our money can be in. That’s because not so long ago, there were high returns on deposits placed in banks. Another reason is that fewer options other than banks existed. However, banking has evolved to be just a part of the financial system. If saving is viewed as an investment option in this case, the return really is not big enough – some banks pay as low as 7% interest annually on fixed deposits. This is not the best way to stash your money, especially if you imagine that there are other investments that can give you that 7% profit in less than a month!
- Cash Payment Is Always the Best
Probably you have heard that credit cards are not good because they can cause you to spend what you don’t have. Is that true? Not really. Experts warn that with financial discipline you won’t fall prey to impulse buying. Moreover, cash transactions can be more costly than credit card transactions. This is because companies offer reward points each time you use a credit card, which can be redeemed and used to buy more goods! On the other hand, when you withdraw cash and pay then, you get no reward points and need to cover withdrawal charges. If you like getting things for free, such as Bloomingdales or Kohl’s and many more have great reward programs you can sign up for to receive extra discounts. You may also check out their coupons, easily available on Discountrue.com or other helpful sites.
- Savings Are Earnings
Some people have grown believing that the more they save, the wealthier they get. This is a myth that has been dispelled by financial experts. That dollar you save after bargaining for four hours cannot make you wealthier. Similarly, hoarding money cannot increase your net wealth. Earnings are supposed to be viewed as marginal increase in what one already has. Rather than wasting time haggling and denying economy the much needed liquidity, organize a portion of your income and develop a big investment idea that will add more to what you have.
- Home Investment Is Good
A myth has also been peddled that immediately you land a plum job, the first investment you should make is buying a home. Whether it is a one-off purchase or mortgaged, a home is valueless if you will not be staying there for the rest of your life. Homes also decrease in value depending on the economic environment. So, don’t worry about not having anything stable – you can consider a rented apartment until you are ready to settle down in one place.
- Invest in What You Know
I should invest in the industry that I know very well. Wrong! This is a statement underlying the myth, ‘better the devil you know’. Just because you work in the industry or you love it, is not a reason good enough. Experts have shown that diversification is a key component of investment. Successful investors have put their money in health, banking, government and real estate. What you know can collapse and leave you badly exposed, while it is possible to research on any industry and invest in it.