There’s a lot of financial advice floating around – some good, some bad. And if you’re not a financial guru, knowing the right direction can be challenging.
Fortunately, there are often multiple ways to achieve the same goal. You may receive advice from different directions, but at the end of the day you have to do what’s best for you and your money.
1. Rent vs. Buying
Many will have you believe that renting is a waste of money and that it’s much better to buy a house. Are they right? Well, it all depends on your goals and what’s important to you.
Yes, buying a home is an opportunity to build equity and increase your net worth. But there’s a simplicity about renting that can’t be denied. For the most part, your landlord is responsible for the larger repairs and maintenance. And since most leases only lock you for 12 months, you can move freely without worrying about selling the home.
Plus, in some housing markets, it’s much cheaper to rent. Not only because the rent is less expensive than a mortgage payment, but also because you avoid other costs, such as earnest money deposits, closing costs and down payments.
2. Whole vs Term Life Insurance
With regards to which is better, it seems like financial experts can’t get on the same page. Life insurance is important no matter how you look at it. And some financial planners push whole policies because they never expire and earn a cash value.
However, whole policies are also more expensive, with monthly premiums that can double or triple that of term policies. It’s no wonder many prefer term policies. Just know that term policies are not permanent. Sure, they can last 10, 20, even 30 years. But at the end of the term, you’ll need to shop for replacement coverage. And if your health has declined since taking the initial policy, you’ll likely pay a higher premium, or be denied coverage.
Whole policies are your safest bet, especially if you purchase when you’re young and healthy. You can receive an affordable premium, and never have to shop for life insurance again.
3. Getting good advice
Whether you work with a financial adviser, a bank or get advice from a knowledgeable friend, don’t be quick to believe everything you hear. It is important that you receive good financial advice – this is the only way to take your finances to the next level.
Mike Kabarec, President at Kabarec Financial Advisors, Ltd. in Chicago, knows the danger of receiving outdated information. He “encourages all consumers to question the advice they may have been led to believe their entire lives and to research and consult with a professional in order to ensure that any financial tip is right for one’s personal fiscal goals.”
There is no one-size-fits-all financial plan, and if an advisor is only pushing one type of product, this can spell trouble. It’s okay to do your own homework and familiarize yourself with available options. This way, you can weigh your research against your planner’s advice and make sound financial decisions.