The Worst Money Advice We’ve Ever Heard

By Nest Wealth on 08/07/2017Article 5 Minute Read

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From keeping a balance on your credit card to investing all your money in real estate, here’s the 5 worst pieces of money advice we’ve ever heard.

I’ll say this much, there was no shortage of content to choose from for this post.

Let’s get right into it shall we?

Always keep a small balance on your credit card

Someone, somewhere, starting telling people that keeping a small balance on your credit card is a good idea… and unfortunately it stuck. 

Man is that terrible advice. Why would you want to purposely pay interest on something when you don’t have to? People claim it helps your credit score, and although credit utilization is a factor in determining your score (the balance on your card versus your credit limit), the idea that carrying a balance month to month helps you out is a myth. 

Paying your bills on time every time is one of the best things you can do to keep your credit score up. 

Bottom line—pay off your credit card in full every month. If you can’t, it’s time to re-evaluate your spending. 

Retire as early as possible

This might not sound like bad advice—retiring early is a great goal if that’s what you want!—the problem is in assuming everyone wants that. 

Some people don’t want to retire early. Heck, some people don’t want to retire at all!

And that’s perfectly fine. No one should be made to feel guilty for their choice or pressured into a lifestyle that doesn’t suit them. Not everyone wants the same thing from life, and we need to remember that when we give and receive advice. Especially around how to spend our money. 

Saving for your future is important because it gives you options—but remember those options are totally up to you. 

Quit your Starbucks habit, it’s a waste of money

You didn’t think we were going to get through this list without mentioning the infamous latte factor, did you?

We know there’s no shortage of talk on this—we’ve actually done a whole podcast debunking the latte factor—so we won’t linger on this one.  

Yes, the little things add up, but spending all your energy stressing over your daily coffee run will leave you mentally exhausted (it’s called decision fatigue) and under-caffeinated. Which, as we all know, isn’t a great combination…

Focus on the big wins—like keeping your housing, transportation, and insurance costs low. That’ll have a much bigger impact over time than cutting out the little things ever could.

Forget the stock market, real estate is the only way to build wealth

We all know someone who’s made a small fortune by investing in real estate which they’re more than happy to tell everyone about when the topic of investing comes up. They can be overheard at dinner parties saying things like, “I like my money where I can see it, in the ground!”

This strategy has worked for some, sure, but it’s definitely not sound advice for the masses. Especially in today’s market.

Just because it worked 50 years ago for your Uncle Jim doesn’t mean it’ll work again now. You’ve got to look at interest rates, affordability, housing market trends, and a whole host of other personal factors when evaluating real estate as an investment strategy. 

The world Uncle Jim was living in when he bought that plot of land looks nothing like the one you and I are in today.

Hinging your future quality of life on the value of your home is actually far riskier than investing in the stock market.

Which brings us to or final piece of truly terrible advice..

Don’t invest in the stock market, it’ll crash and you’ll lose all your money

Crashes happen. But that doesn’t mean you’ll lose your life’s savings! As we’ve talked about the key to being a successful investor is having a plan and sticking to it, because over time those crashes become tiny blips on an otherwise upwards trending graph.

Thanks to the news we know the stock market can feel uncertain but stashing your money under your mattress (or even in a savings account!) isn’t the solution. Because of inflation you’ll actually lose money over time with that strategy. 

Investing your money in a simple, low-cost, diversified portfolio is the way to go. It’s been shown to be a better and more reliable way to build wealth than buying investment properties, stock picking, or keeping your money in a savings account. 

Why? You’re not putting all your eggs in one basket—you can diversify your risk. Magical things called ETFs (which as you know we’re quite fond of here) allow you to own a diversified portfolio of investments no matter how little money you’re getting started with. Owning ETFs lets you invest in different companies, across industries, in different countries. That way when any one section of the market takes a temporary dip you’ve got the rest of your portfolio to balance you out and keep you on track.

Staying out of the stock market is actually a far bigger gamble that being in it. 

What are you waiting for? See how much you could start saving today.