You may have received or come across financial advice from several people. Or perhaps you did your own research, going through different financial content online to further your knowledge about money management.
Nevertheless, there is a plethora of financial advice out there. Some are reliable, while others are not and could lead you astray, hurting your finances. To help you out, here are three pieces of financial advice that you should pay no attention to maintain financial stability.
The Bank is the Safest Place for All Your Money
While it’s a good idea to keep the money you set aside for emergency in a savings account, that doesn’t mean you should put all your money in the bank.
Bank accounts are excellent for the reason that they safeguard your principal deposits. However, they don’t offer much in terms of money growth.
Moreover, the interest rates for savings accounts and certificates of deposits (CDs) have been low, and even during great times, the returns they may generate can still be less than what you may receive by investing.
Another disadvantage with keeping a significant amount of money in the bank is that inflation can hinder their growth, which could result in inadequate savings by the time you retire.
That is why it’s better to put your savings in retirement plans such as a 401(k) or an individual retirement account (IRA). Plus, opening a 401(k) or IRA allows you to benefit from a range of tax reductions.
Credit Cards Only Lead to Debt
Debt is likely what awaits you at the end when you recklessly use a credit card. But if you’re wise and careful with it, a credit card could actually provide some boost to your finances.
A credit card lets you earn a cashback reward every time you pay for something with it. Cashback rewards are bonuses that return about hundreds of dollars to your wallet every year, especially if you can maximize the sign-up bonuses without exceeding your usual spending budget.
In addition, credit cards can raise your credit, provided that you’re consistent and on time with your bill payments. The higher your credit score, the more likely you can borrow money at a reasonable cost when you need to buy a house or a new car.
Buying a House is Always an Excellent Investment
Buying a house can be an excellent investment option since property values can increase over the long term, but that does not mean that you should jump at that opportunity right then and there.
Let’s say you purchased a house. But you ended up spending a great deal due to the repairs and maintenance the house needed over the years. That could have curbed your opportunity to save and invest.
Owning a house can help you stay on steady grounds financially, although you can do better by being a renter. Homeownership is not a bad idea, but keep in mind that such a financial choice will not put you a step ahead of the renters.