Monday, June 27, 2011

Do You Know the Distinction Between Financial TRUTH and FACTS?

Do You Know the Distinction Between Financial TRUTH and FACTS?

One of my working theories is that nothing is really ever false, in the real sense of the word. Just think about the last time you had a passionate discussion (a.k.a. an argument) with someone who had an opposing view. Regardless of the subject, both of you claimed to be right – and needless to say, each believed that the other party was terribly mistaken.

Ever heard the sayings, “Beauty lies in the eye of the beholder” or “One man’s meat is another man’s poison”? I believe these truisms to be accurate because each of us has the right (yes, the right) to define our own truths. Stated differently, we may believe whatever we so choose. Does that, however, mean that “our truth” is fact? Of course, not!

When it comes to facts, the rule is exactly the opposite – in that no one gets to define their own facts. This theory is what has kept me sane over the years as a financial professional. I don’t know enough about other areas, but based on the evidence I’ve seen, I’m tempted to say that no other field has so many folks (including some of the very professionals who are supposed to know better) spouting “truths” as if they were absolute facts.

All you need to do to see this in action is simply perform an Internet search on just about any given personal finance subject. More likely than not, you will end up confused – or much more confused – and that’s regardless of your financial IQ.

The great news here is that a fact cannot be defined, redefined, or tweaked in any way, shape, or form. In personal finance, the 12 statements below are not facts (I repeat not fact); nevertheless, they are “true” for millions of folks – including some so-called financial advisors:
  1. When you retire you’ll be in a lower tax bracket because your total income will be lower than it was when you were working
  2. Aggressively paying off your mortgage debt is savvy and always beneficial to you, financially speaking.
  3. If you hear financial advice through the mass media, it is obviously correct and right for you.
  4. Investments with high gross returns will automatically generate the most income for you to spend.
  5. Investing in a life insurance policy is savvy only for folks who have dependents still in their nests.
  6. 401(k)s or qualified plans in general are, hands down, the best way to plan for your retirement.
  7. Once you ignore the day-to-day gyrations associated with variable investments, you’ll end up well in the long-run, when it matters most.
  8. Term insurance is less expensive than permanent insurance for the same person.
  9. When you file your taxes and break even or receive a refund check from the IRS, it means you did not pay any income tax that year. Alternatively, owing $500 means you paid just $500 in income tax that year.
  10. Learning that the stock market or a specific variable investment has averaged "x" percent return over a given time period means that if you had owned the same investment over the same time period, you’d have earned that return in reality.
  11. Roth IRAs are the best known tax-advantaged vehicles offered in the U.S. Tax Code.
  12. If a particular financial product is good, a lot of people should (and would) know about it – and own it, too.
Just to reiterate what I said earlier, these 12 statements may be truths for some, but they are NOT FACTS. In the coming weeks, I’ll cover each of them (not in any particular order or time frame) and debunk the myths with actual, undeniable factual information. 

So the next time you hear and/or see two or more advertisements by competing manufacturers or service providers, each of whom claim to be ranked #1 in the same category, or two opposing politicians going at each passionately claiming to be right, just remember my little working theory. 
Schedule your complimentary consultation with a financial professional at Laser Financial Group. We'll give you facts so that you can make up your own mind about what is true for YOUR financial situation. 301.949.4449 or

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