Throughout the ages, financial folklore has been handed down from one generation to the next as so-called wisdom. And our generation has been brainwashed with its fair share of folklore. Let’s consider some examples.
1) Buying a home is the best investment anyone can make.
The pummeled housing market should have put this particular fairy tale to rest, but there are a few holdouts that haven’t gotten the message. People, for example, that bought their home decades ago are often cited as proof that buying a home is still the “best investment anywhere.”
But before we count their profits, don’t forget to deduct their insurance premiums, the cost of home maintenance, improvements and property taxes. Including these real-life expenses into the equations portrays a far more realistic picture about the true investment value of home ownership. It’s not as good of a deal as you’ve been sold.
2) Max out your 401(k) plan.
Overstuffing your 401(k) plan with lots of money – is a good savings habits – but won’t necessarily help your investments be more profitable. What about the wonderful benefits of tax free growth and employer matches?