You likely hear financial advice daily. From your mother to your colleague, people are offering advice about how they think you should manage your money. In addition, there are scores of advisers on the radio and TV, in newspapers and online who are offering their advice. It can very easily become overwhelming. Especially because much of it sometimes seems to contradict other advice. One adviser will tell you one thing, while another will suggest you do the exact opposite. And that’s why it’s wise to be choosy about who you take advice from. So, here is some financial advice you should really stop listening to.


Buy the largest home you can afford

This is something you’ll hear often. Real estate agents are particularly guilty of this. Of course, they want to earn the most commission they can. They’ll urge buyers to buy a bigger home, convincing them they’ll need more space, more bedrooms and more bathrooms. The problem with this is that they have no idea about the real story behind your finances. They don’t know about other debt or financial obligations you might have. They don’t know that you could soon be facing unemployment or illness which could prevent you from paying your bond. And the problem with bigger homes is that all costs increase as the floor size does. Water, electricity, maintenance and insurance will all be far more expensive for bigger homes. The cost of replacing the roof, flooring and windows could quickly become far too much for you to handle. Buyers often don’t take these costs into account, only budgeting on the monthly home loan cost. And when you’re struggling to make your payments, your real estate agent is not going to be there to help you.


Rental property is always a good investment

This is one you’ll hear often. But the reality is that the property market can be volatile and you might not recoup your expenses. In addition, if you aren’t able to secure a tenant, the property could stand empty for many months, meaning you’ll lose income. Or you might secure a tenant who does damage to the property, leaving you with the expense of fixing up the house or flat. So, before you venture too far down this path, be sure to have a look at law guides around buying or selling a house. You might find out something new about buying and selling property which could influence your decision. Importantly, keep in mind that there might be better, more secure investment options which are more in line with your attitude to risk.


Put aside 10% for retirement

For many years, this has been the standard piece of advice for retirement planning. But the working world is not the same as it once was. The majority of people used to work for one company for their entire careers, taking advantage of that time to become promoted, take advantage of retirement matching opportunities and earn bonuses. Now, people tend to change jobs every few years. And often, when they do, they cash in whatever retirement savings they have to pay off debt. Making it more difficult to save for retirement, an increased number of companies do not offer traditional pension benefits, leaving the responsibility to save to the employee. In addition, we’re all living longer and more people are expected to live well into their 90s. That means you have to make provision to be financially comfortable for a longer period of time. So, is 10% enough? Probably not and especially if you don’t want to be working well into your seventies.


Stop investing when the market is down

No financial adviser, or anyone with any financial sense, should give you this piece of advice. Many people feel that they shouldn’t continue investing when the market is down. But the reality is that this can be a good time to invest as you’ll be able to buy more stocks and funds. In fact, it’s considered a good idea to invest even more at this time, this is known as a strategy called averaging down.


Everybody needs life insurance

There’s plenty of financial advice around that says everyone should have life insurance. And, the reality is, unless you have dependants – a partner, children or parents – who depend on you financially, you really don’t need this form of insurance. Life insurance is a way of providing income for your loved ones after you’ve died. If there isn’t anyone who depends on your income, this is an additional monthly payment which is serving no purpose.


Leaving your money in cash is the best way to save

There are many people who are fearful of investing. They’ve heard horror stories of the market crashing and don’t feel like it’s a safe place for their money. But the reality is that it’s the most effective way to plan and prepare for retirement. Saving money as cash means it’s not growing more than inflation. Yes, it’s important to have some cash available for times of emergency. Experts recommend you keep about six-months worth of your salary as cash. But, for your long-term retirement savings, this should be invested where it has the potential to earn more interest. Why is this so important? Because otherwise, you’re actually losing money. You’re losing purchasing power and growth is not a possibility for you. The unfortunate truth is, the longer you keep cash, the more of your nest egg you lose.


It is up to you to stop relying on what other people are saying and starting thinking about what makes sense for you. Only you know what you can afford. Stop listening to bad financial advice and, importantly, stop repeating it.


About The Author

I was born in the Eastern Cape, close to the waves. After getting my degree in Media, Communication and Culture, I knew it was time to make my way to a big city. Not wanting to leave the ocean, Cape Town was the natural choice for me. At first I thought the fast paced world of marketing. But I never forgot that what I'd always wanted to do was write. Now I'm a freelance writer, where my office is my bedroom and my platform is the World Wide Web. I live with my partner and our two beloved Great Danes. When not reading or writing you can probably find me on the beach or exploring nature trails.

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