12 Pieces of Dumb Financial Advice That Most People Believe

Finding terrible advice is very easy today. Many gurus proclaim something as the best and another expert says the opposite. Who should you believe?

According to Certified Financial Planners, Advisors, and other money experts, here is the advice you should avoid.

A common mistake is a firm blinding conviction that your company’s stock will continue to rise.

“Your Company Isn’t All That”

Net Worth Gone

You can wake up one day and have 80-90% of your net worth in a single stock, especially if your company has seen exponential growth. Diversifying away from your employer’s stock can be difficult, but carrying this outsized concentration risk can instantly wipe out your net worth.

You should put your old home up for rent after moving into a new one. We hear this from clients at least once a week. In most cases, it's a wrong financial and lifestyle decision.

“Become a Landlord”

Properly Use Leverage

Also, tying up hundreds of thousands of dollars in a low or negative-returning investment can be a costly mistake. Treat it like an investment decision and know your different rates of return, how to properly use leverage, and why continuously setting the correct rent is crucial.

Many times these names happen to be large stocks that trade at premiums. Focusing too heavily on these names could translate into lower expected returns for an investor who primarily concentrates their portfolio on just these names. 

“Invest in Familiar Companies”

Instead, consider utilizing Index Funds or ETFs, which allow you to gain exposure to a diversified basket, including names you might not have heard of but have the potential to deliver outsized returns.

Index Funds Are Life

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