Don’t be a fool on April Fool’s Day.
Today is the perfect day to discuss financial myths. Let’s look at six of them, together.
- A balance on your credit card helps your credit score.
Nope. Use your card and make on-time payments is what you need to do. An ongoing balance only helps the credit card company make money off of your foolishness.
- Once you’ve paid your cards off, cut them up and close the accounts.
Not so fast. When you close an account, you’re now shortening your credit history and that can lower your credit score.
- Pay your student loans and mortgage off as fast as possible.
Not necessarily. Think of a loan as ‘renting money’ from someone else, whether it’s a bank, the government or even a relative. If the ‘renting of money’ is cheaper than what you might be able to earn on it elsewhere, you may wish to reconsider. Are you earning more than the cost of renting those dollars?
- Plan your retirement on suggested ‘rules of thumb’.
Don’t generalize your retirement planning. If we’re all individuals, shouldn’t our retirements be individualized, as well? Some people love working, some don’t. Some have Pensions, some don’t. Some want to travel the world, some don’t. Some love to play the stock market, some don’t. Individualize your planning.
- You should only choose mutual funds with the best performance.
This is like chasing a rainbow. The next time you see one, get into your car and chase it. There is no pot of gold. Instead, use a balanced approach. A well-diversified portfolio at any given time may have some winners along with some losers; that’s what balanced means.
- Don’t worry about your estate plan until you’re old and grey.
I have experienced unimaginable times for individuals, couples and families who were only in their twenties and thirties. We don’t have a promise given to us of old age. If you care for someone, anyone; especially your spouse and your family, today is the day to prepare for all the contingencies of life and what it may bring your way.
Don’t be the fool this April Fool’s Day. Prepare yourself and for the one’s you love.
