Top 5 Money Myths Busted!

Every person has been affected by some superstition or myth that affects their decisions. Money matters are no exception to this.

Many people are familiar with statements like “Investing is risky; it is better to save” or “Retirement planning is possible starting at 40”. How many of these statements are true? Are they doing more harm than good for your finances?

These are five common money myths that we’ve all heard.

Savings are better than investing

Are you able to save more money than you can invest?

If you can understand the power and potential of compounding, no.

You do not need to save for a rainy or reach a goal. The right investment will make you money in the long term.

Inflation can also be combated by investing. Inflation refers to a decrease in purchasing power.

Saving is safer, but you’re losing the money you could have made if your investment was in mutual funds. This is due to compound interest.

To Invest, You Must Be Rich

Many of us have heard from family and friends that investing is only for the wealthy. You can’t invest unless you have a lot. What if we said that even $10 per month is enough to start investing?

Today, there are many investment options. There are many investment options available today, including mutual funds and RDs/FDs and stocks. Each choice is based on your risk appetite and end goal.

The best thing about many investment options is the low minimum required amount. It is worth it considering the huge returns they offer instead of saving (as shown above).

Credit cards are great for emergencies

Credit cards can be a great financial product because of their ease of use and rewards. However, the interest rates are quite high (25 to 30%). Credit card use should be planned carefully.

You will be in huge debt if you cannot repay the amount borrowed during the interest-free grace period. Although compound interest may help you make more, your debts will be even more expensive. You can either borrow a personal loan for multiple repayment options or break your emergency fund in an emergency.

It is necessary to buy a car

A car is a dream for almost all young professionals. However, will this make you more financially stable over the long term?

It would help if you also considered that cars are an asset in decline and will need to be maintained. This will add cost.

You shouldn’t ever buy a car. Not at all!

Only buy a vehicle if it improves your quality of living and saves you time. Please do not buy it because someone has advised you to.

Plan for retirement after 40

Planning is never too late. As inflation increases, financial responsibilities increase. With that, the value of your money decreases if your expenses are low. Rather than spending excessively, save for retirement by investing in retirement plans or low-risk options like RD, FD, etc.

The magic of compounding can help you earn more over time. Start saving and investing early to make your money work for yourself.

In conclusion

Everyone has an opinion on money matters. However, not all opinions are true. Financial myths can lead to financial ruin and even loss of money.

Every person’s financial situation and goals are different. Before you listen to others, do your research.