“Sticking your head in the sand does not prevent the tide from coming in.”
In the world of financial planning, we’ve seen all sorts of strategies and advice being provided, but just how do you separate fact from fiction. How can you tell the brilliant from the BS.
Below I have dispelled some of the more common financial planning myths that I have come across.
- “I’m investing to reduce my tax liability”
Making the key factor for your investment decision the tax benefits that it will derive will more often than not lead to a poor financial outcome. Focus on your financial goals, and how a particular investment will help you to achieve your capital growth or income targets before executing.
- “I just don’t believe in superannuation”
With regular changes to the rules around superannuation, it’s little wonder that there’s a complete lack of clarify when it comes to how superannuation works and the benefits associated. The simple truth is, superannuation is one of the most tax efficient retirement savings vehicle that the majority of Australians should be utilising to provide for their retirement.
If you’re concerned about how your superannuation is performing, or would simply like to have it reviewed, please contact us here and we can arrange a complimentary review for you.
- “Only invest in shares what you can afford to lose”
This is one I’ve heard on a number of occasions and it’s easy to see where it’s come from. The taxi driver with the ‘hot tip’ or your neighbour to heard about the ‘next big thing’ through the grapevine. Often, these stories end in disaster and are nothing more than ‘spruikers’ trying to drive the share price up.
This produces an entirely different outcome to investing in a blue-chip portfolio of well-run, profitable companies, with a proven track record. These are the companies that aren’t going to simply vanish without a trace and can be an excellent component of your wealth creation strategy.
- “Financial advice costs too much”
This is a myth that we hear less and less, which makes sense given the downward pressure that has been placed on the industry over the decade and impetus for advisers to clearly justify their value-add. However, every now and then we will come across the aversion to paying fees. Remember this, “if you think paying a professional is expensive, just wait until an amateur gets their hands on your money”. In most cases, it’s the ‘free’ advice that often ends up costing you the most.
- “My finances are simple, I can do it myself”
The truth is, you may very well be able to handle the day to day management of your finances yourself and have the time and capacity to do so. It’s important to recognise however that your personal finances may in fact be more complex than it appears and there may be key areas you’re missing, particularly when it comes to tax, estate planning and residency considerations.
After all, it rarely hurts to obtain a second opinion on your finances, even if it’s just a confirmation that you’re on the right track.
Feel free to send in other myths or rules that you’ve heard. We’re happy to share our thoughts to ensure you’re empowered to make smarter financial decisions.
To Your Financial Success!
Jarrad Brown is an Australian-trained and qualified Independent Fee-Based Financial Adviser with Australian Expatriate Group of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to international and local professionals in Singapore.
Book a complimentary consultation here.
Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd – No: 200305462G | MAS License No: FA100035-3
*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.