Don't Myth Out
Six common misconceptions about financial planning.
Don't Myth Out
Six common misconceptions about financial planning.
MYTH 1
Investing in property is the safest way to grow your wealth
The facts
While property has a place in an investment portfolio, you shouldn’t rely on one asset to preserve and grow your wealth. That’s why diversification is one of our key investment principles. We like to include a broad range of global assets in our investment funds.
MYTH 1
Investing in property is the safest way to grow your wealth
The facts
While property has a place in an investment portfolio, you shouldn’t rely on one asset to preserve and grow your wealth. That’s why diversification is one of our key investment principles. We like to include a broad range of global assets in our investment funds.
MYTH 2
It’s best to pay off my debts before starting to invest
The facts
Not always true. Back in the 80s and 90s, when interest rates were in double digits, it was wise to reduce debt wherever possible because borrowing was so expensive. But today’s ultra-low interest rates mean you could potentially get a bigger boost from investing than from paying off your loans.
You should always remember, though, that the value of your investments can fall as well as rise and you may not get back what you put in. In addition, holding too much debt can have consequences. As ever, a balanced approach is best.
MYTH 2
It’s best to pay off my debts before starting to invest
The facts
Not always true. Back in the 80s and 90s, when interest rates were in double digits, it was wise to reduce debt wherever possible because borrowing was so expensive. But today’s ultra-low interest rates mean you could potentially get a bigger boost from investing than from paying off your loans.
You should always remember, though, that the value of your investments can fall as well as rise and you may not get back what you put in. In addition, holding too much debt can have consequences. As ever, a balanced approach is best.
MYTH 3
You can ‘self-insure’ should something go wrong
The facts
'Self-insuring’ – relying on your own assets to fall back on when things go wrong – can be bad news, particularly if you need the money quickly. How long would your assets take to sell? Could you be forced to sell at a bad price, even a loss? What about the tax implications?
Income protection, critical illness insurance and life insurance could provide funds quickly, exactly when you and your family need them.
MYTH 3
You can ‘self-insure’ should something go wrong
The facts
'Self-insuring’ – relying on your own assets to fall back on when things go wrong – can be bad news, particularly if you need the money quickly. How long would your assets take to sell? Could you be forced to sell at a bad price, even a loss? What about the tax implications?
Income protection, critical illness insurance and life insurance could provide funds quickly, exactly when you and your family need them.
MYTH 4
Wills are for old people
The facts
The benefits of a well drafted will are huge, whatever your age. It can help ensure your wealth stays within your family rather than dissipating through divorce and separation, and provide a lasting legacy well beyond your lifetime. Don’t wait until it’s too late.
MYTH 4
Wills are for old people
The facts
The benefits of a well drafted will are huge, whatever your age. It can help ensure your wealth stays within your family rather than dissipating through divorce and separation, and provide a lasting legacy well beyond your lifetime. Don’t wait until it’s too late.
MYTH 5
I should wait until shares are cheap before I invest
The facts
It’s about time in the market, not timing the market.
Trying to time the markets – buying and selling at the best possible time – is very, very difficult. Virtually impossible. And more often than not you’ll lose out. If you cash-in when markets fall, you could miss out when they bounce back; if you wait until things start to rise you could miss most of the benefit.
MYTH 5
I should wait until shares are cheap before I invest
The facts
It’s about time in the market, not timing the market.
Trying to time the markets – buying and selling at the best possible time – is very, very difficult. Virtually impossible. And more often than not you’ll lose out. If you cash-in when markets fall, you could miss out when they bounce back; if you wait until things start to rise you could miss most of the benefit.
MYTH 6
Cash is the safest place for my money
The facts
As your cash sits comfortably in your bank account, its value could be quietly eroded as time passes by a stealthy enemy – inflation.
Inevitably, prices rise. That means the value of our wealth reduces at the same pace. So while there are benefits in keeping cash in a bank account – ease of access and reliability for example – you may want to consider ways to keep your cash ahead of those rising prices, such as investing.
MYTH 6
Cash is the safest place for my money
MYTH 6
As your cash sits comfortably in your bank account, its value could be quietly eroded as time passes by a stealthy enemy – inflation.
Inevitably, prices rise. That means the value of our wealth reduces at the same pace. So while there are benefits in keeping cash in a bank account – ease of access and reliability for example – you may want to consider ways to keep your cash ahead of those rising prices, such as investing.
your questions answered
Listen to our financial planning experts talk about a range of topics including inheritance tax, wills, buying your dream home, and pension planning.
Advice and product fees may apply if you decide to progress your financial plan following your free consultation.
When investing, past performance should not be taken as a guide to future performance. The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your original investment.
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Contact your private banker at any time or call +44 (0)20 7957 2424 for more information.
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