What is a myth? Dictionary.com defines a myth as:
1. a traditional or legendary story, usually concerning some being or hero or event, with or without a determinable basis of fact or a natural explanation, esp. one that is concerned with deities or demigods and explains some practice, rite, or phenomenon of nature.
2. stories or matter of this kind: realm of myth.
3. any invented story, idea, or concept: His account of the event is pure myth.
4. an imaginary or fictitious thing or person.
5. an unproved or false collective belief that is used to justify a social institution.
Each piece of the definition states something regarding it being unproven or made up. However, there are always people that continue to believe in these myths allowing them to continue for generations. In fact there are many types of myths, medical, supernatural, religious and I learned in researching this topic that some are even exclusive to nationalities. The most common of myths are urban legends like Bigfoot or the Lochness Monster. There are even myths related to money and personal finances. Many of you may have laughed when you logged in to see the feature image of Bigfoot, because it seems so laughable. The myths that seem laughable are easy to dimiss as an educated or reasonable person, however I wanted to highlight 6 financial myths that many people have either believed or fallen victim to in the past.
Myth #1- “I will be in a lower tax bracket at retirement.”Myth#2- “My 401(k) plan creates a tax savings, which can be spent or invested.”Myth#3- “Compounding interest creates a financial miracle.”Myth#4- “I won’t need life insurance when I retire.”Myth#5- “A 15 year mortgage costs less than a 30 year mortgage.”Myth#6- “While in retirement I will only need to keep pace with inflation.”
If you would like to understand more regarding the myths listed above I would encourage you to contact me or your advisor to see how they relate to your personal financial situation.
Has there been a time when you encountered one of these thoughts above?
Comment below and tell me about that situation.
Do you know of other financial myths that should be included? Share them below.