I posted this question on LinkedIn: “What is the biggest piece of misinformation you’ve been told/read about money?”
I got 26 responses. Take a look at all the responses to my LinkedIn question.
Here is the one I picked as the best answer, from Sean Chester:
That paper assets (equities,bonds and cash) and real assets (real estate & gold) always appreciate in value over the long term (like 10 years or more).
Where is it written in stone that you can’t have negative stock market returns for more than a decade??? No need to address the real estate market as we know that residential property will be hurting for sometime to come.- I’m not talking about income properties. Go look at Japan and our own market history and you can see long stretches where the market provided weak returns for a 10 year segment or more. What exactly is meant by long term investing..100 years?
It is o.k. to use your credit card to purchase vacations, big screen t.v. or other disposable goods/services because you will make more money in the future and pay it off. No you won’t! and you have nothing to show for it.
That your house is an asset. My question is your house makes money for you how exactly? My description of an asset is that it is providing a current economic benefit or will in the very near future. Buying a home and hoping someone else will buy it 5 years from now for a higher price is dangerous. It always has been!
The biggest one for myself is how some of the financial players use persuasive psychological tactics to sell investments to you in glossy marketing campaigns. I just saw Snoopy try to tell me to buy stuff from Metlife! My favourite is the gentelmen on CNBC who combines circus noises in with his “instant oatmeal” equity analysis. By nature the handling of money and investing is very quantative and qualitative. As an investor you do this with the purpose of giving you a reasonable basis for value. You then can compare that to an asset price.
I have lots and lots of issues with the money world. I haven’t lost faith in it but it needs to change.
What do you think of Sean’s answer? Did I pick the best one? Which did you like best? Better yet, which ones were you amazed to read?
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