Podcast Episode 260: Going Against Conventional Wisdom in Finance
Created: July 8, 2022
Modified: August 4, 2022

Podcast Episode 260: Going Against Conventional Wisdom in Finance

What You’ll Learn:
Conventional wisdom can act as a great guide of us in life but that doesn’t mean that we can’t question commonly held beliefs. Today we’ll explore the conventional wisdom found in the financial world and explain why it doesn’t always align with where you need to go.

The funny thing about conventional wisdom is that it’s not always the wisest. As the world changes, so does our approach to finances and that’s why we have to question conventional wisdom.

We’ll do that on this episode of the Money Wisdom podcast with Eric Hogarth, CFP®, and we’ll begin with the idea that ‘you can’t go wrong with real estate.’ Real estate always seems like a safe bet because it’s an asset that has scarcity, but it’s not as easy of an investment as it can appear on the surface. A lot of people think about buying a multi-family home to generate rental income in retirement, but there’s so much that goes into making that a successful investment.  

Just because other people are able to manage real estate well doesn’t necessarily mean that it will work out for you. The time and money alone it takes to make repairs is beyond what many people are ready to tackle. So yes, a lot of money can be made in real estate but a lot can also be lost as well.

The next bit of conventional wisdom we want to tackle is that a mortgage is always good debt. Yes, debt can be categorized as ‘good’ and ‘bad’ and we know that credit cards are bad debt. But is a mortgage good debt? The answer is, yes, usually. It can help prevent you from using a bunch of money out of your retirement to play for a house, but the rule is you don’t ever want to have a mortgage that you can’t afford. A lot of people think that carrying a mortgage allows them to write off the interest each year but that tax deduction might not even matter if you aren’t itemizing your deductions. So just because it might be categorized as ‘good’ debt in the conventional sense, it doesn’t mean it’s always best to carry it.

Now let’s talk about the idea that retirement is a time to relax after a career of hard work. This seems like a pretty practical approach, but do you really want to do nothing with all that free time? The goal in retirement is to get yourself to a work-optional state in life where you can find things you want to do without having to worry about the financial side. Be thinking about how you want to spend your time in retirement because you might find you’ll get bored quickly.

The last piece of conventional wisdom to discuss is that when your investments aren’t doing well, just try something else. In this investment era, there’s a constant stream of information and opinions coming our way, so it’s easy to get caught up in the next hot investment. When we’re quick to abandon a plan, then we put ourselves at risk of chasing and end up trying to time all our decisions. That’s not a great strategy.

Want to find out how this conventional wisdom applies to your financial plan? Take advantage of our complimentary Money Map review process and let’s start taking a look at your financial future.

0:51 – ‘You can’t go wrong with real estate’

4:54 – ‘A mortgage is always good debt’

8:32 – ‘Retirement is a chance to relax’ 

12:06 – ‘If your investments aren’t doing well, try something else’

13:25 – Money Map Review

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