The financial industry has traditionally been saturated with lies, untold truths, and myths about financial planning. It’s hard for most individuals to figure out what’s what. That’s why we’re here to break down 10 of the top myths about financial planning:
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1. Financial planning is only for the wealthy
Many individuals still believe that financial planning isn’t for them because they don’t make a specific amount of money. This couldn’t be further from the truth. Financial planning is for everyone, regardless of income, social status, or spending practices. However, it is true that conventional financial planning was reserved for the wealthy due to its high cost. Those days are long gone thanks to low-cost (mainly) digital usefulness.
2. You need to already have savings and investments
This belief prevents many individuals from getting started with a financial plan. In fact, everyone starts at the identical place – with $0 until they make their first investment. The key here is to get started as soon as practicable, regardless of the amount you have sitting in your bank. Your plan will tell you what you require to do on a monthly basis to not only maintain your lifestyle but to reach your goals and avoid many myths about financial planning.
3. A financial plan is only about investing
Absolutely not! If this is what you’ve been told by your current financial consultant, then you’ll want to rethink that relationship. A good financial plan goes beyond the investment side of things to assist you to minimize your borrowing costs. Not only that, a good financial plan will protect you and your family by making certain the right insurance is in place.
4. A financial plan is pretty much just a budget
While there might be some overlapping between your budget and your financial plan, it’s significant not to confuse the two. Your (Planswell) financial plan will give you clear suggestions to optimize your borrowing, investing, and insurance so that you can preserve your lifestyle (and budget) into your future. If budgeting is your thing, we do have a fancy budget calculator to assist you to take control of your monthly spending habits.
5. Once you create your financial plan, you’re set for life
Your plan isn’t and shouldn’t be a “one and done” type of item. It needs upkeep. As life progresses and things change, so too should your financial plan. We suggest updating your plan every six months. These small but periodic adjustments reduce the risk of things going off the rails and massively increase the possibility of reaching your goals and updating myths about financial planning every 6 months.
6. Financial planning is expensive
If this is what you’re thinking then you’re presumably going to an advisor who is charging $3000 for a plan, or putting you into mutual funds and other derivatives that charge 2% or even 3% every year, kicking normally 1% back to the advisor. So yes, that is quite expensive – however it shouldn’t be and doesn’t have to be that pathway. Planswell Portfolios uses Stocks and ETFs with an average fee of just 0.17% per year bringing your total cost to .57-.67%, which can preserve you hundreds of thousands of dollar over your lifetime.
7. You need to go to the bank for your mortgage
That’s precisely what the big banks want you to believe, but the reality is there are dozens of useful mortgage lenders in Canada. Shopping around is consistently in your best interest. Run if they use fear to encourage fixed rates, and remember not to accept the first offer sent your way because it’s possible you’ll get a better mortgage if you hold out a bit.
8. You need an insurance agent
Again, just like the above with your home mortgage, it’s essential to shop around for your insurance to find the right policy to fit your needs and your budget. This doesn’t have to be a different insurance agent who is disconnected from the other aspects of your financial life. At Planswell, we secure your insurance with your investments and borrowing to help you maximize the value of each part.
9. You can only get a plan from an advisor
Long gone are the days when you’d require to meet with your advisor in person to go over your financial plan, and thankfully so. Would you rather spend numerous hours and multiple meetings to construct your financial plan or do it all for free online in less than 3 minutes? We’d like to consider it a no-brainer.
10. A financial plan only focuses on my retirement
A good financial plan focuses on all of your personal and financial objectives, not just retirement. Your financial plan makes it more manageable to reach your short and long-term financial goals because you have clear and measurable targets to achieve.
Busting the myths about financial planning
While financial myths swarm the enterprise, there is a lot of good, guidance that you can find without having to look under a rock. At Planswell, we’re helping many Indians like you take control of your personal finances so you can judge better about your money.