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Common financial myths busted, from hacking your retirement to investing in the markets
Financial wellness is a big deal. And it can certainly feel like a burden. And every now and then, in the process of info-gathering and researching the best approach to our finances, a big fat myth slips through the cracks. Whether you heard it on TikTok or at the holiday dinner table, we're here to set you straight. And, whether you're 27 or 97, it’s never a bad time for a myth-buster!
Myth: You have plenty of time to save for retirement
Nope! Saving for retirement when you’re young can actually make or break your retirement.
Well, kind of. It just puts you in a WAY better position when you're getting closer to retirement age, when you have loads already stockpiled. While it’s still possible to aggregate money later on in your career, saving for retirement early is the best way to go. You may push off your retirement savings with the excuse “I’m just not making a lot of money right now, I can just save when I’m making more”—but trust us when we say that’s isn’t ideal. Don’t fall into this trap.
The benefit of starting early is compound interest. Compound interest is calculated based on the initial principal amount and the accumulated interest from past periods. Read: you're getting paid for interest on your interest! Essentially, the more money you have in your account when interest is calculated, the higher interest you will accrue. Starting to save for retirement young is crucial if you want to experience a (generally) stress-free retirement process.
It’s simple: start young, accrue more. If you haven’t started yet, don’t fret! If you feel like you’re already behind; don’t panic; just start today. No, not tomorrow. Today. Your future self will be very grateful.
Don't have a 401K option? No worries! Other options for retirement savings exist!
Psst, have an old 401K? Take this as your sign to look into your 401k and IRA options, and if that route is right for you.
Myth: the stock market is a scary place to put your money
Nope! Turns out, when you've properly diversifying your portfolio, you've done some research, you are intentional and have a plan, investing in the markets can be solid investments!
Whoever tells you this myth that the stock exchange is too volatile to trust with your money, is making an overgeneralized, incorrect statement. Now, keep in mind the markets fluctuate and, pending your risk tolerance, you need to figure out where you're most comfy.
Wall Street doesn't have to be a scary place if you know how to navigate it. Undeniably, there are better methods to invest in stocks and there are worse methods. So, a negative return on an equity investment doesn’t necessarily mean it’s the stock market’s fault that something went wrong; it could be a portfolio mistake.
So your grandma always told you “don’t put all your eggs in one basket,” but how does that relate to your adult investments? The more diversified your portfolio, the less likely you are to see dramatic dips in your overall investment performance.
Say a technology stock you invest in experiences a large increase in stock price due to the outflow of a new product, yet the oil stocks you bought suffer a large loss due to trade disagreements with other countries; your combined portfolio may not suffer. Hopefully you have more equity in the positive returning stocks than the negative ones. That comes from keeping yourself educated and updated on the market. Imagine you had all of your money in the oil stocks: your entire portfolio would have dramatically suffered. Keep your money diversified in investment types (i.e. bonds and mutual funds in addition to stocks) and in a wide array of stock types and industries to minimize risk.
Psst, if you need to take this from the top, take a gander at 10 Investment Tips for 20 Somethings and Become a Master of Your Investments.
Myth: You need to be wealthy to be financially well
Heck to the no! That's why Pocketnest exists—to make financial wellness more accessible.
Use the Pocketnest financial wellness platform to achieve financial wellness in just 3 minutes a week. We'll coach you through all 10 themes of financial wellness, from setting and sticking to a budget to planning for the future with retirement savings, investments and estate planning.
Hop into your To-Do List and get crackin' on that plan! You got this!
Myth: Financial planning is too time consuming
Nada! Well, unless you call 3 minutes each week time-consuming!
Planning out your finances is all about being consistent. Think of it as studying for a final exam: you can study two hours a day for the week leading up to it or you can study 14 hours straight the night before. Which method earns the better score? Probably the first method.
The same logic applies to your finances: if you put a little time into managing your money each week, you would have put in sufficient time each month and year. Yet, if you keep pushing off your planning, you’ll be left unprepared and financially stressed. Bite the bullet and take a few minutes now. It’s a marathon not a sprint. Use whatever cliche you can internalize to explain the importance of small steps. In fact, with Pocketnest, all you need is a mere three minutes a week to keep yourself on track.
Bust those myths
Overall, Pocketnest can help you put all this myth busting into practice. You can start saving for retirement, allocate money for investments, create a comprehensive financial plan, and stay up to date with your plans and goals. It’s important not to let anyone’s false finance ideas drag down your financial confidence.
Bottom line? Your plans are personal and should be tailored to your unique situation and goals—hey, just like Pocketnest!