Here are the ones I disagree with:
- Pay off your mortgage. Not smart, especially if you have a mortgage which costs you 3 - 4% and you can make double that in safe investments.
- Never use credit cards. Stupid. Use credit cards, but always pay them off at the end of the month. Can’t handle the “charge it” lifestyle? Keep a ledger, like a checkbook; every time you charge something write it down and you’ll always know your balance.
- Diversify your investments, but only in the stock market. Dumb. Self serving for financial advisors who sell product. The stock market is only one form of investment. Look to real estate, real assets, collectibles, etc.
- When you are in retirement, you need lots of bonds. Why. Bonds are a terrible investment in a low-interest environment and when interest rates go up, you lose principal value, unless you plan on holding the bond to maturity.
- Never lease a car. Why? Maybe the lease costs you less than buying and financing it. If you want a new car every couple of years, maybe leasing makes the most sense. Just don’t over-spend.
- Delegate your investments to a financial advisor. Delegation without supervision is abdication. If you have investments, you need to spend the time to study about investing and watch what you have.
- Buy and hold beats trading. Maybe. Maybe not. Never fall in love with any investment. Challenge yourself as to why you own a stock or mutual fund at least every six months. If something isn’t performing, get rid of it. Holding on to losers is not smart.
- Growth beats dividends. Really? I like the old saying “show me the money.” Just a personal preference. I want investments that at least return some tangible reward on a regular basis. Too many investors chase the dream of capital appreciation, hoping to buy the next Apple or Google. Sorry, but I’m not that smart or lucky.