4 Major Money Myths Debunked

Over the years, we’ve all encountered money myths that have stuck around despite evolving markets and investment trends. Although widely believed, these myths can significantly limit your financial potential by keeping you stuck in limited ways of thinking. Below, we’ve listed some of the common myths and why they may not apply in our current day and age. —Julie Shipley-Strickland, senior wealth advisor, Julie Shipley-Strickland Wealth & Risk Management, Wellington-Altus Private Wealth

Myth 1: Save 10% of your income for retirement

While saving is essential, the notion that setting aside exactly 10% of your income will guarantee a comfortable retirement is far too simplistic. This one-size-fits-all advice doesn’t consider factors such as your income level, financial goals, or personal values. In reality, your savings strategy should reflect your unique situation. There may be times that enable you to save more, and other times, or situations, where financial priorities shift, limiting your ability to save. By adjusting your savings plan to match your circumstances, you’ll be better equipped to achieve long-term financial success. Don’t stress if you’re not always able to save that 10% and celebrate when you’re able to save more.

Myth 2: The Rule of 72 predicts investment growth perfectly

The Rule of 72 is a basic way to estimate how long it takes for an investment to double based on a fixed annual rate of return. While it can be useful for beginners to grasp the concepts, it’s not a reliable predictor of future returns. Markets are complex, and this rule doesn’t account for fluctuations, inflation, or personal risk tolerance. A more comprehensive financial strategy involving advanced tools and professional advice will provide a clearer picture of your investment’s growth potential.

Myth 3: It’s too early or too late to invest for retirement

Yes, we’ve all heard at different points in our life that we are too young or too old to start investing for retirement. Both beliefs are misconceptions. The truth is, it’s never too early, or too late, to start planning for your future. Integrating simple investment practices in a child’s routine early on can help establish good financial habits that they’ll carry into the future, and for those who think they’ve missed the boat, remember — it’s never too late to start. Even thinking about your financial future is already a step in the right direction, and don’t forget, small contributions have the potential to make a significant impact over time.

Myth 4: Buying a house is the only way to invest

Homeownership has long been seen as a cornerstone of financial security, but it’s not the only path to building wealth. With skyrocketing real estate prices, many individuals, especially millennials, are opting to rent and invest in other areas. Diversifying your portfolio across various asset classes, such as stocks, bonds, exchange-traded funds (ETFs), and alternative investments, can potentially reduce risk and increase returns. A house is just one piece of the puzzle. Always ensure to consult a financial professional who can educate and assist in creating a plan that best suits your needs and risk.