Financial advice comes in all shapes and sizes, but do you know how to separate the myths from the facts?
To make sure you stay on the right track financially, Odetta Bodibe, Financial Adviser at Liberty, shares her insights.
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MYTH 1 BUYING A HOUSE IS MORE EXPENSIVE THAN RENTING
Renting may be convenient and cheaper in the short term, but it offers neither opportunity for wealth creation nor return on your monthly investment. Instead, all your hardearned cash likely goes towards paying off the property owner’s home loan. When you buy, you own your property at the end of the loan term. You can sell your property for a profit or you can rent it out for additional income to help you pay off the bond. You may also save money in the long term, as there are possible tax deductions related to income-generating properties. However, buying is not for everyone and there are many variables at play. Consider your situation before taking the leap, but don’t simply give up and believe the myth. There may be opportunities that work for you.
MYTH 2 YOU HAVE TO BE RICH TO INVEST
Even if you earn a small income, you are still able to invest your money in the stock market, property, gold or even a retirement plan. The best way to make sure that your money works for you is to speak to a financial adviser or broker, who can help you invest your money properly and according to your needs. You don’t have to be rich to enjoy the rewards of investing. Good financial planning involves drawing up a budget and making a promise to pay yourself first, by putting money away every month and then leaving it to grow. A good plan will improve even a poor investor’s financial situation. The small choices you make now can add up to big changes in your future.
MYTH 3 THE MONEY PLACED IN A SAVINGS ACCOUNT IS A GOOD INVESTMENT
Having a savings account is a great idea. It allows you to save up for emergencies or any goals that you’d like to achieve financially. While some savings account may allow you to withdraw money at any time, they have limited interestearning potential. If you want your money to grow, look at alternative investment options.
MYTH 4 YOU SHOULD ALWAYS PAY OFF DEBT WITH THE HIGHEST INTEREST RATES FIRST
While this might be the cheapest way of paying off debt, it is not the only route. Tackling all small debts first might also inspire you to chip away at the large ones.
MYTH 5 BUYING AT SALES SAVES YOU MONEY
The only time you save money at a sale is if you buy something you were going to buy anyway at a cheaper price. Sales often trigger impulsive buying. Ask yourself: ‘Would I still buy the item if it weren’t on sale?’ If not, you could instead invest the money or use it for something you really need.