5 Financial Myths That Could Work Against You

5 Financial Myths That Could Work Against You

We've all heard the old saying, "A penny saved is a penny earned" a million times. And, here at LearnVest, we're all in favor of any quick-hit wisdom that helps keep your personal finances in line. But have you ever wondered how truly helpful—and accurate—some conventional money advice really is?

In her recent Reuters column, writer Linda Stern takes on five financial platitudes and talks about how they could be leading you astray.

1. "Don't Take a Mortgage Into Retirement With You."

With interest rates near record lows, people who have recently refinanced are likely to be paying less for a mortgage than they would on any other type of loan. Rather than trying to pay off the mortgage now, investing cash in a retirement account is a much better use of your money. You'll thank yourself later if you run into any unexpected expenses and need cash, or decide that you want to stay in your house through your golden years. You'll be better off than having to get a pricey reverse mortgage down the road.

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2. "Never Borrow Against Your 401(k)."

This is a good rule to obey under most circumstances—withdrawing money from a 401(k) before you retire can cost you. However, if an unexpected expense arises, and you find yourself lacking the cash in an emergency account, then dipping into your retirement fund could still prove a better option than racking up credit card debt or taking out an unsecured loan.

3. "The Older You Get, the Less You Should Have Invested in the Stock Market."

Conventional wisdom says that older investors should shift their portfolios away from stocks as they age. But bonds have been offering depressingly low yields of late, and interest rates on certificate of deposit funds aren't the boon they used to be. Planning for a 25- to 30-year retirement—and leaving an inheritance—requires an investment strategy that can stand the test of time. Overall, stocks still out-earn other investments in the long-term.

4. "A Debit Card Is Safer Than a Credit Card."

If you're a shopaholic, this may be a good rule to live by, but if you can spend within your means, credit cards can offer great benefits such as cash rewards and freedom from worries about overdraft fees.

5. "Be Practical About Your College Major."

Major in something that you're passionate about, but save money by pursuing that passion at a less expensive school. While some majors do tend to offer more earning potential than others, no career is fixed with employment or salary guarantees. So, Stern says, "follow your bliss," and don't bet on a career just because it seems like the sensible thing to do. You may end up hating or regretting it down the line.

RELATED: 9 Types of Financial Advisers: Which One Is Right for You? 

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