Personal Finance Rule #3 | 20s Money

25 July 2011 61 views One Comment

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Continuing our series of the 20smoney Personal Finance rules, we get to big number three.? This rule has more to do with investing and retirement saving versus the traditional personal finance topics of budgeting, saving, getting out of debt, etc.

The rule is two parts: a) Only you care about your money and b) Wall Street cares about making Wall Street money, not you.

There are a number of ideas that we have bought into dramatically that have been pushed repeatedly by Wall Street and the financial sector.? These ideas for the most part benefit Wall Street more than anyone else. Let?s look at a few examples.

1. Mortgage debt is good debt
2. You should always buy stocks because over a long enough period they will always go up
3. Renting is throwing your money away
4. Gold has no real value
5. Diversification means the removal of risk

We could go on, but you get the idea. You could sum up the statements above with the idea that Wall Street wants you and me to put as much money into stocks as possible and to have as large a mortgage as possible. Why? Because our portfolios will generate fees for Wall Street and our mortgage guarantees decades of cash flow to Wall Street and the financial sector. We are their money makers.

So, does this mean you shouldn?t buy stocks, have a mortgage and do anything that Wall Street suggests?? No, but it means you should understand their point of view and how you result in making them money.? Then, make your decisions with that in mind.

Only you care about your money. You need to get up to speed enough on investing and other areas of finance to make your own, objective decisions and filter out the nonsensical axioms of American finance. All advice out there usually comes with an agenda attached, so make sure you understand how that agenda is influencing that advice.

Read everything you can get your hands on.? Learn the markets.? Learn how various investments react in different economic times.? Read some more.? Make your own decisions.? Be objective.

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Source: http://20smoney.com/2011/07/25/personal-finance-rule-3/

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