In today's fast-paced world, where access to information is available at your fingertips 24/7/365, it's not hard to find financial advice.
The issue is not finding it. It's whether or not it works.
Today's financial world is not the same as your grandparents' financial world. Developing and implementing a financial plan was not something your grandparents would have done. They lived from day to day.
Today, we have 401(k)s, Roth IRAs, IRAs, Hybrid Insurance Policies, Annuities, REITs, Options, and a multitude of other investment options to fit inside your asset allocation plan, carefully crafted to fit your financial plan.
Much of that financial advice sounds good on paper but fails to work in reality.
For instance:
Ignore the noise – A phrase that is drilled into every CFP’s head from the day they pass their exam.
But try doing that in reality in this age of information – it's damn near impossible. You're bombarded at every turn with alerts, messages, and social media posts directing your attention to a carefully crafted narrative.
It's just not viable in today's world. You can't bury your head in the sand.
Instead, face your fears head-on, call your advisor, and refer back to your financial plan to remind yourself of why you own your investments in the first place.
Don’t look at your statements – Yeah, right? Who doesn't look at their accounts on a regular basis? Maybe a better strategy would be to only look a few times a year, and never during a bear market.
A better use of your time would be to do anything other than look at your account values on a daily basis.
DIY everything, even your financial plan – No thanks, I value my time.
Rent instead of buying, and you’ll gain freedom from worry – Owning your home is not just about the money or about having an asset. It's about having a home where you can build your family.
You need 12 months' worth of living expenses in an emergency fund – This is something only rich people say.
Not many people can afford to set aside that much money. While a worthy goal, it's just not realistic.
Instead, build liquidity into your system through various strategies (such as the bucket system we discuss in our clients' meetings), and know exactly how much you have available and how quickly you can access it.
Never, ever use credit cards – That's antiquated advice in today's environment of rewards and points. Credit cards, as long as balances are paid off every month, can be an effective tool for building credit and earning points for travel.
You don’t need a (nice) car – This one makes me laugh, particularly when you try to tell parents that a cheaper car would be better when they are busy ferrying their kids from place to place and then driving back and forth to work all the while fearing that their car might break down.
No thank you! I want to know if my car will start and run every time I use it.
Cancel your Netflix – It’s $18/mo. Increase your income instead.
The same applies to having a side hustle (i.e., you're an Uber driver on the side); focus on your main hustle.
Build wealth by skipping the $6 lattes – No, how about staying invested through every market correction and scary headline over 30 years and watching your wealth compound in ways you never dreamt possible?
If you can’t do that, then hire an advisor who can keep you steady in the most trying of times, which prevents you from blowing up your own retirement.
Sometimes, you are your own worst enemy.
Build a real estate portfolio for passive income – No thank you, the real world is nothing like television.
Want to make money in real estate like the Property Brothers, Chip and Joanna Gaines, or Grant Cardone? Plan to spend a small fortune and a decade or more trying to get the attention of a television network, who by some small miracle happens to give you a show and then pray 24/7 to the creator that lightning strikes twice in the same place, that your show becomes a hit.
You’ve got a better chance of getting run over by a milk truck driven by an angry beaver during a hailstorm in the middle of a tornado while it’s snowing than that happening.
Real Estate is not the financial magic wand you think it is.
Stay the course, my friends.