Noticed almost everyone in your life seems to have some financial “wisdom” for you?
In a world where money is seen as the solution to humanity’s biggest problems, everybody will have an opinion on it. However, not all advice you get is useful. As a matter of fact, some so-called tips could be a recipe for financial disaster.
Here is a list of money tips that you’ve probably heard that you should not take seriously.
Never go into debt
Many people fear debt, and for good reasons. However, borrowing money can be useful in many ways. For example, it is almost impossible to get an education, buy a home or expand a young but promising business enterprise without going into debt. Nevertheless, make sure that you will be able to pay back the debt in a timely manner before going for it. Even if your credit rating is not up to scratch, there are financial institutions that offer guarantor loans non homeowner. All it takes is a short online application and you get an instant decision.
Always go for the highest returns
Everybody wants to make the most money from their investments. However, if going for the highest returns means risking everything, don’t do it. To be safe, always take a calculated risk which may not necessarily promise the highest returns.
Bonds will generate good income
If you want to generate a good income, don’t go for stocks. Stocks don’t earn people much. However, diversify your portfolio to include stocks and use them as a buffer for risk. You would want to have some funds somewhere when there is a downturn in the market.
The stock market is just too risky
Many investors lost faith in the stock market after the last recession. And no one can blame them. However, the stock market still remains a lucrative place to invest, the risk notwithstanding. Don’t miss out on making some good returns because of fear.
Only stocks that earn dividends are worth it
You could also miss out on great stocks if you use dividends as the yardstick to measure stocks. There is nothing really special about dividends. They are taken off a company’s revenue and could cause the share price of the stock to drop.
Take out a mortgage
Investing in a mortgage can be a great way to get a place to live. However, the timing has to be right. Otherwise, it can turn out to be the worst financial mistake of your life, unless of course, you plan to rent it out.
Bet on one stock
It can be tempting to invest all your money in a single stock that is doing well. However, one stock will lose you a lot of money if the share price plummets. That is why it is always wise to diversify your stocks to spread the risk.
You never lose on real estate
A real estate investment can provide excellent long-term returns and future financial security for you and your dependents. But like with all markets, there is no guarantee of success. An extensive market research is crucial to ascertain that a particular property will be a good investment for the long haul. Buying in the wrong location can be suicidal.
Diversification is the key to building wealth
Many people have made great wealth by diversifying their portfolios. Many have also made it big by focusing on the one thing that they love. Therefore, there really is no silver bullet for success. You just need to focus, plan, execute, learn from mistakes and bounce back every time you fall.