In the world of investing, there are commonly-held beliefs that we all take at face value and follow without questioning. They’ve been around for a long time and they’ve become a guide for investing for many people. We want to take these ideas and bust them wide open.

During this episode of Money Wisdom, we’re taking on three of the biggest financial myths and explaining why they are incorrect. We’ll also use Joel’s understanding of finance to help us extract the investing wisdom from fortune cookies. The show will close out with three mailbag questions from listeners with Joel doing his best to answer them all thoroughly.

Here’s a look at what we discussed with timestamps that you can click to take you to specific conversations in the show.

Quote of the Week

We pulled a quote from Peter Lynch that applies to investing specifically as well as life in a broader sense. Peter worked at Fidelity for many years and used a lot of common-sense strategies for picking stocks and other investments, and Joel tells us what this quote means to him.

[0:31] – Quote of the Week: “Know what you own and know why you own it.”

Financial Myth-Busting

As we said before, there are many financial myths floating around and that can lead to people investing based on bad information. But some of those myths also deal with retirement, like the amount of income you’ll need and whether life insurance is still necessary. We’ll pose four different beliefs to Joel and find out why they aren’t completely accurate.

[3:44] – Let’s do some financial myth-busting. Myth #1: Shifting from stocks to bonds removes the volatility from your portfolio.

[5:37] – Myth: Once you’re retired, life insurance is no longer necessary.

[7:14] – Myth: You’ll need less income when you’re retired than while you’re working.

[8:56] – Myth: Financial planning today is much easier to do without professional help because of all the technology that’s available.

Financial Fortune Cookies

Who doesn’t love a fortune cookie at the end of their Chinese dinner? Isn’t it great pulling out that little piece of paper and finding out what your fortune might hold? Well, we decided to take the fortunes and find out if they can be applied to finance and investing.

[12:55] – Financial Fortune Cookies. This segment idea reminded Joel of a time he used fortune cookies to deliver messages to veterans at a local event.

[14:19] – Fortune: Crisis is an opportunity riding on a dangerous wind.  

[15:20] – Fortune: A feather in the hand is better than a bird in the air.

[16:47] – Fortune: Accept something you cannot change and you’ll feel better.

Mailbag

Our first mailbag question today comes from Kathy, who is considering a divorce and is wondering about the joint tax filing. She’s been separated for a few years but never filed the divorce officially, so the joint tax return remains an option. That might be a benefit for her moving forward but always seek the counsel of a lawyer and a financial professional to confirm that it’s in your best interest remain separated. Joel explains even further.

The second question comes from Jack, who has done a great job paying down his debt and is almost free and clear. He wants to know the best way to invest the $5,000 each month he’ll now have, and Joel gives him some great options to consider as he tries to play catch up with his retirement portfolio.

The final question comes from James, who is considering picking up some work in retirement. He’s already started collecting his state pension and Social Security, so he wants to make sure he won’t be penalized for getting a part-time job. If you want to work and continue earning, go ahead. Just consider there might be some lost Social Security income if you get over a certain amount of earnings over the course of the year.

[18:27] – Mailbag question: My husband and I have been separated for almost three years but haven’t gotten around to getting a divorce. It’s nice that we’ve still been able to file a joint tax return. Is there any reason we shouldn’t just keep the status quo to save money on taxes?

[19:43] – Mailbag question: I’ve been paying off debt aggressively and almost have it all knocked out, including the house. Once it’s done, I’ll have nearly $5,000 to save per month. I want to be aggressive to catch up with my retirement planning so what should I invest in?

[21:32] – Mailbag question from James: I retired last month and started my state pension and Social Security. I want to do some part time work, but I heard it could mess up my Social Security. Is this true?

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