I’m frequent reader of personal finance blogs. Some of them are full of wisdom. Some not so much.
Today I’ve selected 10 stupid tips that you can read on some personal finance blogs.
1. Too frugal ideas
Make a plan for monthly grocery shopping and do it once, drink only tap water instead of beer, make your own toilet paper… All kind of stupid advice is telling you how to save $0.01 and live miserably instead of enjoying life and focusing on more important things.
I’m all for being frugal with reasonable limits. You probably don’t need new phone if your old one is working fine. You probably don’t need the most expensive wine as the taste isn’t that different from the $10 one. But if you want to buy a $50 bottle of wine for your birthday this is not so bad. Don’t let frugality turn you into miserable creature. Focusing on every dollar saving is sure way to waste your time for unimportant things.
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2. Investing in gold (or whatever) is always smart
Whoever is telling you that some kind of investment is always “green” is an idiot. There is no such thing like always good investment. Today it might be good to buy gold, but tomorrow might be much better to sell it. Everything is hot in a given time frame. The key is to know when to buy it and when to sell it. With the right timing you can make money from rocks. Have it wrong and you can lose a lot from investing in diamonds.
3. Buy lease
Some bloggers love the “live now” trend. Why wait, you can buy everything lease and pay later. Nothing puts you more in the rat race than living on credit. Don’t do it. Just don’t. If you can’t afford something, don’t buy it unless it’s a life-saving surgery.
Getting a loan to invest in your business however is completely different matter.
4. Live now, not tomorrow
Similar to above, some bloggers (usually having affiliate links to payday loan companies) make you to believe that you should buy everything now and not when you can afford it. Like if you didn’t buy the latest game console you wouldn’t be living good life.
This is bullshit in its perfect purity. Most stuff is not important. So buy it when you can really afford it. It’s often great to delay your purchase until you save the money because new and better stuff comes out for the same money – this is very true with gadgets.
5. Your goal should be early retirement.
What’s the deal with this early retirement? You can’t wait to sit all day in front of the TV and watch series? Your goal should be to avoid the rat race, not to not work at all. Aim to work what you like and when you want – not to retire and do nothing.
Making calculations and aiming for early retirement with basic low income is absolute nonsense. Like this guy for example. All due respect to him, he has his own reasons, but it’s still nonsense. You never know what will come. Will you be healthy. Won’t you discover new passion, new love, new need that requires some money. Trying to figure out all your life and plan it to the last penny? No, thanks.
6. Real estate is a low risk investment
It’s not, it never was, and it will never be. Real estate is expensive. It has low liquidity. It requires maintenance. And as we sow, the prices can go down as well.
7. Day trading equals high risk investment
Day trading is not investment. It’s gambling messed with some semi-scientific methods of prediction. Find something better to do with your money and your life.
8. You need a lot of cash to invest
No, you don’t. You can start investing with less than $1,000. Ideas are abundant. See for example this great article.
9. You need a lot of cash to start a business
No, it’s not. You can start a service business by having phone and placing an ad in the local newspaper. You can start web business by just having a domain name and hosting (and a lot of patience). You can start product business by having your idea funded by crowdfunding.
10. You need X dollars in the bank to escape the rat race.
No you don’t. See 8 and 9.
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