We have all been guilty of listening to family and friends when it comes to our personal finances. Whether we want to gain their perspective on how to handle things or just to get some free advice based on their own experiences.
But there is always a danger of relying too much on the opinions and general hearsay of other people. Whatever works for one person will not necessarily work for another. So when it comes to making a solid financial plan and putting together a long-term investment portfolio, it is important to consult a professional financial advisor who has the expertise in this particular area.
Asking others for advice boils down to the fact that it is not always easy to take care of your personal finances alone. Everyone has a unique method of organising their own affairs. Some people may have more time, ability and motivation to look after them properly whilst others may not. Either way, we all tend to share similar beliefs regarding our finances that may not always be helpful, often heard through the grapevine of well-meaning family and friends.
A person may dive headfirst into Bitcoin because it made their friend a slight profit last week without understanding cryptocurrency and their volatility, whilst another will invest blindly into a company their uncle’s neighbour’s dentist assured them was the next big thing without performing any research or having investment experience.
We take a look at some of the more common financial myths shared amongst circles and bust them wide open.
“Cash is king”
In the UK, we tend to like keeping a lot of our money in cash. But having the bulk of your money in a savings account could mean you are missing out on greater returns over time. With deposit rates not far from above zero, savers are under pressure.
There are alternatives to keeping all of your savings in cash, if you are willing to accept the added risk. Investing in equities and bonds for the long term gives you the potential to earn investment returns that couldn’t be matched with keeping your money in a retail bank account.
“You have to be rich to invest”
Investing is becoming much more accessible for people however there is a still a common misconception that you need to become rich first before you can invest. The key is finding an investment plan which suits you and your individual financial goals, as everybody’s circumstances are different.
You can have the wealth management service and investment advice with Rosecut without the high entry point and the price tag in ongoing fees.
“I don’t earn enough to save”
This belief in particular prevents some people from even attempting to start saving. You can always find an excuse not to put anything aside each month and this can be damaging for your financial aspirations in the long run.
Compounding your returns is a powerful force of investing and can help your finances increase by reinvesting rather than paying out. If you budget and put away a small amount of your income each month you will be shocked how quickly this can build up into a sizeable pot.
“Investing would take a lot of my time to get right”
Most people are time poor. We all have busy lives and don’t want to spend our spare time dealing with our financial affairs. Investing can therefore be viewed as too time consuming to undertake and give the appropriate attention to. This can put people off from investing as they feel they cannot commit an adequate amount of time to truly get this right.
Rosecut offers regulated financial advice from our investment experts and a that can help you plan your financial goals and achieve them in your own time.
“Property is the only good long-term investment”
Having your own home is seen as the best way to make the most of your money by a large number of individuals, since this is a more tangible long-term asset. You can physically see a brick house as opposed to investment stocks and shares on paper.
People should look to diversify their portfolio and not just hold property with a concentration risk in real estate. One of the most basic factors that makes an investment an investment is your ability to control the timing of your ownership, which is not always possible with a property.
“I never invest as I don’t understand the markets”
Having limited knowledge and experience surrounding the stock markets and different asset classes can put people off from investing completely. This means that individuals are missing out on investment opportunities due to their own lack of confidence.
Rosecut welcomes first time investors by offering them the necessary tools to put together a financial plan which compliments their goals and proposing an investment strategy that suits individual needs. Start today for the future you want, because mighty oaks from little acorns grow.
So although it is easy (not to mention handy) to use family and friends as a sounding board for our financial needs, some advice may not always be based in fact.
Speak to one of our investment advisors today and gain more clarity on your own personal financial situation. You can also drop us an email with any questions you may have at: firstname.lastname@example.org.
Remember that the price and value of your investments and income derived from them can go down as well as up. You might not get back the amount you originally invested. When investing your capital is at risk.