stupid beliefs about finance

le_loup

oldvicar wrote: »

Of fixed term deposit accounts: It's my money, so I am entitled to have it back whenever I want.

oldvicar wrote: »

Deposits up to £85K are completely risk free because they are Guaranteed by the government.

oldvicar wrote: »

People receiving Tax Credits are not on Benefits.

What's up? Can't sleep?

talexuser

When the failed Tory MP, then chief exec of the British Banking Association, jumped up on TV and explained exactly why banks don't need ringfencing of retail and casino operations you should pay attention to what she said!

cos_2

The only safe way to double your money is to fold it over once and put it in your pocket.



Oh wait - maybe that's a true one:)

zerog

JimmyTheWig wrote: »

Rent paid is no more dead money than mortgage interest paid is.

Absolutely. Mortgage interest is just rent to the bank.

Pachira

"A bank is a good place to start for financial advice."

This reminds me of a telephone conversation with a barclays 'advisor' a couple of years ago who tried to sell me their will writing services. I was reliably informed that if I died without making a will, all of my worldy goods would pass to the state. Despite extensive questioning on my part (I'm married, have siblings .. surely you mean 'intestate'?... are you absolutely sure you're not misunderstanding the probate process? ... etc etc) the sales rep remained absolutely adamant that everything would go to the state.

Terrifying.

nb73

kidmugsy wrote: »

People ask for advice on what to read; people ask for advice about what to invest in. But what many people probably need above all is warnings against stupid but common beliefs. I invite MSE fans to identify some of these. I'll start the ball rolling with three that I've seen hereabouts recently.

(i) Never sell an asset at a loss.
(ii) Rent paid is dead money.
(iii) When you die your pension company steals your annuity.

Hold on...

(i) Never sell an asset at a loss, forms part of my very long term buy and hold investment strategy. It helps me to weigh very carefully the investment choices I make, because if I wouldn't be happy to hold the asset through all forseeable situations, I proabably won't buy it. It has also helped me avoid the emotional impulse to panic sell in bear markets.

(ii) Rent is dead money. This is clearly more true than false. Can you get the rent you have spent back somehow? Is it alive in some other way? No. Rent is spent money, just like mortgage interest is spent money. Spent = dead.

(iii) When you die your pension company steals your annuity. OK, false, it's clearly a contract rather than a theft. When you take out an annuity you effectively hand over your pension fund to an insurance company and in return it promises to pay you an income for the rest of your life. But people still need to chew this over!

grey_gym_sock

nb73 wrote: »

(i) Never sell an asset at a loss, forms part of my very long term buy and hold investment strategy. It helps me to weigh very carefully the investment choices I make, because if I wouldn't be happy to hold the asset through all forseeable situations, I proabably won't buy it. It has also helped me avoid the emotional impulse to panic sell in bear markets.

that all makes sense, but do you also follow the rule: "never sell an asset at a profit"?

because if you don't, you are (to some extent) selling winners and hanging on to losers. which i suspect might be a bad strategy - though i may be jumping to a conclusion with not nearly enough info.

atush

Always wise to occasionally lock in profits.

ChiefGrasscutter

Pachira wrote: »

"A bank is a good place to start for financial advice."

This reminds me of a telephone conversation with a barclays 'advisor' a couple of years ago who tried to sell me their will writing services. I was reliably informed that if I died without making a will, all of my worldy goods would pass to the state. Despite extensive questioning on my part (I'm married, have siblings .. surely you mean 'intestate'?... are you absolutely sure you're not misunderstanding the probate process? ... etc etc) the sales rep remained absolutely adamant that everything would go to the state.

Terrifying.

If indeed you had no will AND had no surviving relatives then all your worldy goods do go to HMG.

Hooloovoo

zerog wrote: »

Absolutely. Mortgage interest is just rent to the bank.

During the period you're paying a repayment mortgage I agree the interest is "rent to the bank" and as such is "dead money".

However, the massive difference is that after 25 years of paying a repayment mortgage you own a house you can live in and never pay rent or a mortgage again.

After 25 years of paying rent you own the privilege of continuing to pay rent.

That's why renting really is dead money.