Money Myths That Refuse to Die
Money, in some form, has been around for thousands of years. Myths about it have survived for generations and persists today. Like everything else, misinformation about the subject goes through cycles. That’s why urban legends about life insurance continue to reappear every decade or so. The only way to combat these recurring inaccuracies is to set the record straight with facts.
Some of the top offenders in the 2020s include incorrect information about not just life insurance, but also real estate investing, compound interest, credit cards, and car buying. For whatever reason, mainstream media outlets tend to spread wrong ideas, which makes so many myths hard to eliminate once and for all. Review the following points, which include the most common money-related myths of the modern era.
What Are Some Money Myths?
Life Insurance is a Bad Deal
There are some very good deals for those who know how to shop. Young adults can get some great bargains on whole and term life coverage. Even older adults can shop for policies that serve as interest-bearing savings accounts. By sticking with top carriers and only purchasing as much protection as you need, life insurance can be a formidable part of a person’s financial security portfolio.
Real Estate Investing is for the Rich
Anyone can profit from a wise real estate investing strategy. The misconception about real estate is that it takes a giant sum of cash to get started. While well-heeled adults do use that approach to acquire a large share of a commercial or retail property, there are significant risks to the strategy. The market could collapse soon after someone buys a major stake in an investment property. The result is a potentially massive loss of capital. What’s a safer alternative for beginners who want to gain the security of real estate without all the risk?
Dollar-cost averaging (DCA) is how everyday working adults get a foothold in real estate without committing a fortune to the process or to any one property. DCA is a commonsense tactic that lets investors spread their risk and investment capital over several months, years, or decades. That way, there’s no need to engage in the delicate act of timing the market or making split-second decisions about specific opportunities.
The method calls for no expert-level skills, talent, or knowledge. Plus, it supports the core of the long-term wealth building concept by focusing on steady, consistent, and slow contributions to a portfolio. Likewise, people can use DCA to enhance any financial arrangement they prefer, including IRAs, brokerage accounts, emergency funds, real estate portfolios, and many more.
Credit Cards Are Financial Poison
Used correctly, plastic can improve your credit. Those who overuse credit cards can get into trouble fast. But for the rest of the public, plastic can serve a good purpose. That’s particularly true for individuals who pay their balances off each month and never exceed 30% of the spending limit. What’s the reward? In addition to higher credit scores, those who use cards responsibly will be offered higher limits, better terms, and lots of incentives for remaining on the customer rolls.
