Busting the Biggest Stock Market Myths
“Learn about different investment vehicles and asset classes and… you can make confident, informed choices about what’s best for you.
I am very concerned about the millions of baby boomers who are counting on the stock market to deliver them a safe, sound, long retirement. I am afraid the baby boomers who are counting on the stock market are in trouble.”
—Robert Kiyosaki, 2014 interview
Three of the most pervasive myths perpetuated by typical financial advice are:
- The stock market is the best place to invest long-term,
- Bonds are the best place for your safe and steady money, and
- The trick to successful investing is simply balancing how much you have in stocks and how much you have in bonds, according to your risk tolerance, age, and other factors.
Today, we’re calling “BS” on this limited thinking!
Last week, we issued a warning about bonds in 2018, asking if bonds were still a good place for safe money. (The short answer was, “No.”)
Bond volatility increases while profits vanish
If you’ve been paying attention, you’ll know that bonds aren’t what they used to be. Values are declining, risk is up, investors are selling, bond funds are underperforming, and municipal bonds are no longer the safe haven they once were.
“With the demise of the bond insurance industry in the financial crisis, credit quality in the market has become a much bigger concern for investors,” reported financial journalist Andrew Osterland on February 28, 2018 for CNBC.com. Earlier in the year, Financial Times noted sell-offs and declared that “the long bond rally could stall—and perhaps even unravel—in 2018.” This week, Bloomberg.com noted “concerns over volatility” in high-yield bonds. Even Kiplinger.com, which typically faithfully tows the line of “typical” financial advice, had harsh words for bonds in a December 2017 article:
“An amazing potential exists to lift someone’s income and financial success purely and solely by lifting certain barriers from their thinking.”
What is the difference between “the millionaire next door” and your neighbor who is silently trapped in debt? What distinguishes the billionaires and business leaders of the world from the rest of us?
The difference is mindset.
With an abundance mindset, people create massive wealth from nothing but an idea, the confidence that it can be done, and the determination to see it through. Without a growth and abundance mindset, people begin with lottery winnings and inherited fortunes and end up with nothing.
If Goldilocks paid taxes, she’d want to pay just the right amount—not too much or too little.
But real people who don’t live in a fairytale tend to overpay their taxes, giving the IRS free use of their money in exchange for smaller paychecks.
Yes, most Americans have either accidentally or voluntarily shrunk their take-home pay.
And of those who don’t overpay taxes, many have underpaid and will struggle to catch up.
If you are one of the majority of Americans overpaying or underpaying your taxes, here’s what to do—and why.
“The successful giver knows it is better to give an orchard than a harvest.”
–Kim Butler and Kate Phillips
This article has been exerpted/adapted from the forthcoming Family Banking Book.
An inheritance is a gift—not an obligation, but there is a strong cultural tradition of leaving an inheritance, at least, if there are assets to be left. However, it’s a tradition that can no longer be assumed to be “the way things are.” Many working and middle-class folks already feel they have under-saved for retirement, never mind an inheritance. Other parents question if their gift will be used wisely, causing a majority of givers to remain silent about the details, fearing it could sabotage their children’s ambitions or independence. And ultra-wealthy have been making headlines as they re-think how—and how much—to give.
Have you ever failed financially? Has financial recovery ever taken longer than you hoped? If so, you’re not alone. This week, we asked co-author, friend and team member Kate Phillips of TotalWealthCoaching.com to share her experiences and insights.
Ten years ago, I described the Financial Crisis as “the dark before the dawn” in a blog post that went viral. At the time, I was a financial coach, but after transitioning into my own business just before the Financial Crisis, I was beginning to have my own money troubles.
I was entering into my own financial dark night of the soul, and those troubles were about to get much worse. Little did I realize that blog post would become my own encouragement in the months and years to follow. It contained essential lessons I revisit and share today.
We are thrilled to be able to say that that one of our financial books is now available in multiple languages! Thanks to our friend Ken Ma and the team he gathered to work on this project, Busting the Interest Rate Lies: Discover the Whole Truth About Money and How You Can Keep Control of Yours has been translated into Chinese. The new version contains both English and Chinese text, and is intended for Chinese Americans, as the financial products and strategies discussed are mostly specific to a U.S. audience.
Busting the Interest Rate Lies was originally published in April of 2016, nearly two years ago. Mostly written in the format of a story, the book follows “Gary,” a fictional young man and “Emily,” who becomes his financial advisor, from a high school classroom until Gary becomes a successful business owner and accredited investor. Along the way, he purchases his first car, first home, investment properties, and eventually, alternative investments.