Over the course of my career as a Wealth Advisor, I have seen money myths come and go, but many have endured through market fluctuations, investment trends and more. I’m here to tell you that despite all of this, they are, in fact, money myths. Defined as a widely held false belief or idea (thanks Google Dictionary), these myths are naturally limiting—keeping you confined to an already established way of thinking or practicing. In debunking some well-established money myths, I am freeing you up to expand your horizon and readjust your wealth-planning strategy thinking, which will hopefully bring you abundance in the future! I hope that some of these “myths” are familiar to you, and if they aren’t, well hey, you learn something new every day.
Save 10% of your income to set yourself up for a comfortable retirement
Contributing to your savings is undoubtedly crucial. However, the blanket statement of saving 10% doesn’t consider factors such as income levels, financial goals, and personal values. Our finances are an incredibly personal part of our lives, and it’s essential to adjust your savings percentage based on your unique circumstances. Think of it as your own unique style! It’s specially curated to your interests, needs and can fluctuate with the seasons. There may be times in life when you need to use most of your paycheck, while other times allow for saving a higher percentage of your income. By customizing your savings plan to reflect your individual situation, you can better position yourself for long-term financial stability and success.
The Rule of 72
The Rule of 72 is a simplified rule of thumb for estimating the time it takes for an investment to double in value based on a fixed annual rate of return. This is often used by beginner investors to better comprehend their finances, however, relying solely on this rule may not provide accurate projections. If I could, I would recommend using more sophisticated financial tools and methodologies that account for a broader range of variables and potential scenarios. It can be a good starting point, but it’s important to conduct thorough research, seek professional guidance, and leverage comprehensive financial planning strategies to make informed decisions about your investments.
It’s too early or too late to invest in retirement
I often hear two arguments when it comes to investing for retirement: that it’s too early and it’s too late. The reality is that both couldn’t be farther from the truth. On the early side, I always say that it’s never too early to start saving. I’ve had my kids saving since they were toddlers, and it’s helped to build great money foundations for them as they get older. Now, they have a better understanding of what investing is, and they are prepared for forward-thinking in their future wealth-building goals.
On the flip side, there’s also the idea that past a certain age, it’s “too late” to invest into retirement. Like my point above, it’s never too late to start investing. Yes, building good investment habits early on is beneficial, but it doesn’t mean you can’t start now. Thinking about your finances is the first critical step in the wealth-building process, which means if you’re reading this, you’re in a good place!
Buying a house is the only way to invest
While homeownership has traditionally been associated with financial security, investments beyond real estate are a crucial part of the investment puzzle. More and more millennials are choosing to rent rather than buy due to increasing housing prices and the freedom that renting brings. Relying solely on homeownership as an investment strategy may leave you vulnerable to market fluctuations. Diversifying investments with your chosen professional across various asset classes, such as stocks, bonds, mutual funds, ETFs, and alternative investments, can spread risk and potentially enhance returns over time.
If you’re eager to continue learning about these myths, terms and practices, I’m always adding educational posts on my Wealth With Julie Instagram Facebook and LinkedIn, so you can also get your dose of financial content there, in real time.
