When I read or hear that “the conventional wisdom” or “standard advice” on any topic is such and such, I turn the page / change the channel / close the webpage. I’m unconventional and non-standard, and I bet you are too.
Why “Conventional Wisdom” Exists
Since Money Counselor is about personal finance, let’s focus on money advice (though I think these ideas apply to just about any area).
Why were “conventional wisdom” and “standard advice” invented? Two reasons I’d suggest: 1) Lots of people make a living in part doling out standard advice, and 2) many people are too lazy or too busy or too intimidated by money topics to learn enough to make choices that would be best for their personal, unique, non-standard circumstances. So they make a market for standard advice and assume it’s working for them.
For Best Results, Be UNconventional
Just about anything you can name—shoes, diet, cable TV (remember that?), your smartphone—will work better for you if customized, or tailored, to meet your individual preferences and aims. That’s obvious, right? It’s no different with money advice.
The less standard you are, the uglier might be the results if you take the easy way out and adopt standard money advice.
Learning enough to make money choices better suited to you has never been easier and gets easier every day. This website is a great place to start! ☺
3 Pieces of Standard Financial Advice Best Ignored
To get you started on the path to making better money choices, let me try to rock your world and stir up some name-calling comments by highlighting three conventional money wisdoms you’ve probably heard that I recommend be ignored:
1. To Retire Comfortably, You Must Invest the Lion’s Share of Your Nest Egg In Stocks
I’ve written a whole book on this one, and you’ll find many articles on this site where I offer my reasons for classifying this standard advice as bulls**t. But in a nutshell: the idea that stock buying is the only or even the best way to go when saving for retirement is an invention of the high-powered Wall Street marketing machine, designed to help enrich money managers, not you. Stocks’ risks are glossed over, ignored, misrepresented, and shrugged off by those ‘in the business.’ Moreover, stock markets are openly rigged to fleece “retail” investors (that’s you and me).
2. Don’t Pre-Pay a Mortgage at Today’s Low Rates (Buy Stocks Instead! See above.)
Paying down a mortgage with an interest rate above zero is almost always a good idea. Read “Mortgage Payment as Investment” to learn why. And keep in mind that your financial advisor earns no fee on ‘managing’ cash you use to pre-pay your mortgage or other debt. Might that influence his or her advice? Hmmmm, I wonder….
3. Know Your Credit Score
Confession: I don’t know my credit score. Moreover, I’ve never known my credit score, ever. I can’t figure out how knowing my score will help me. Now, knowing how to optimize my credit score can help me, a lot! So I don’t waste my time and money following my credit score or engaging in credit score comparison competitions. Instead I do what I can to optimize my score, whatever it happens to be.
Why Be Normal?
Buying into standard advice is boring. Instead, try doing something that will shock your standard advice-taking friends. Be different! Be unique! And be quietly smug when you see the results compared to your line-toeing friends! ☺