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I like to come in every January with clear goals and an achievable strategy, so one of the things I want to do before the end of the year is to set a future plan for my finances.
While there is a lot of financial advice out there, I wondered if there was anything I needed to remember to avoid in early 2022. So I asked four financial advisers to share some bad advice that I did. they often tell their customers to ignore.
1. Think of your home as an investment
As the New Year approaches, you might start to strategize about investing your money and taking stock of your current investments. Financial planner Justin Nabity said some advisers always tell clients to approach their home as an investment, which he says is bad advice.
“While there are some lucky homeowners who have used their home equity to support their retirement, that’s not the case for everyone,” Nabity said.
“The biggest problem I have when advisors tell clients that their home is an investment is that it makes them wonder what a real investment is,” he explained. “Assets make you money, so your house is not an asset unless you bought it with the intention of selling it for a profit over the next few years.”
Instead, Nabity suggested that people should just think about how their home fits into their larger investment strategy.
2. Set unrealistic financial goals
As we start to think about New Year’s resolutions, financial advisor Scott Satov said it’s best to avoid broad financial goals that can’t realistically be achieved.
“It’s also important to be specific in your goals so that you have real numbers to measure your work,” Satov said.
He gave the example of “saving more” as a broad and popular goal and suggested defining this type of goal with concrete measures.
“Open a high interest savings account and set up automatic withdrawals from your regular account every month,” Satov said. “Once you set it up, it will do the job and you will start to see the savings account grow. “
3. Invest only in stocks of large companies
If you’re considering making new investments next year, financial adviser Scott Hasting said he believes investing only in large companies is a bad idea and investors should aim for portfolio diversity instead.
“While it’s good advice to invest in stocks, it never pays to pick one or two big companies and put all your savings into them,” says Hasting.
“All stocks are affected by the global stock market, so it doesn’t matter how big or small the company is. If it collapses, you’ll take a hit,” Hasting explained.
4. Keep credit card balances to build your credit score
Whether you walk into 2022 with credit card debt or not, financial advisor Andrew Lokenauth said it’s a bad idea to hold onto credit card balances with the idea that you’ll get a better credit score.
“Not paying a credit balance in full each month lets that balance accumulate additional interest each month, and these fees continue to grow more and more due to
“Two of the most important factors that influence a credit score are payment history and credit utilization rate, and paying off your card balance in full each month positively affects both of these factors,” a- he added.