Seven myths about financial advice

Know the facts – myth-busting financial advice

When it comes to managing finances, everybody’s got an opinion, whether it’s about retirement planning or saving on your tax bills or choosing investments.

And the more people you talk to, the more opinions you may hear – not all of them true. Here, we myth-bust some of the most common preconceptions about financial advice.

Myth 1: “ I’m too young to start planning for retirement”

FACT: Nowadays, it is common for people to retire at different ages. Gone are the days when retirement came at age 60.

With the right advice and financial plan, you can identify the financial steps required to retire earlier and achieve your goals. Time is a powerful ally when it comes to building wealth and securing a comfortable retirement. The sooner you begin, the more options and control you will have over your retirement journey.

Myth 2: “My property is my retirement plan”

FACT: Your home, or a buy-to-let property you may have, can be part of your retirement plan, but you’d risk putting all your eggs in one basket if it’s your only source of retirement income.

If the property drops in value when you need to sell, or the rental market slumps, so will your income. Or your reserves won’t last as long as you need them to.

Better to make it part of a holistic plan that includes other types of investments, to better diversify your portfolio and spread your risks.

Myth 3: “I can do my own financial planning”

FACT: Financial planning isn’t the same as budgeting. Many people are good at managing their personal or family budgets, but long-term financial planning requires an additional level of professional expertise and knowledge. Tax regulations for example can change regularly. And it’s easy to miss opportunities or accidentally find you’ve made a costly mistake if you’re not managing money full time.

Expert financial advice over the long-term allows you to prepare well in advance for major life stages such as retirement, or even funding for future generations. Advisers help you navigate complex decisions or challenging times, bringing greater confidence and peace of mind throughout your life.

Myth 4: “Financial advice is only for wealthy people”

FACT: Many people imagine that you need a six-figure sum to start investing. In fact, just investing smaller amounts regularly means you take advantage of times when market prices are low, so your money buys more shares, as well as when prices are high.

But financial advice and planning is about a lot more than investing.

Financial advisers today advise on managing wealth but also on balancing budgets and

managing debt, finding the right mortgage, and leaving an inheritance. Things that affect most of us, not just the wealthy. The goal of financial advice is to help you and your family achieve, and maintain, financial wellbeing.

Myth 5: “Financial planning just means investing”

FACT: Knowing where, or how much, you want to invest, or how much risk you’re willing to take, is very much part of financial planning.

But it’s only part of the plan, not the whole plan. Financial advice is about your financial wellbeing – a plan for life. That includes balancing the family budget, having cash to cover an emergency, finding a mortgage, protecting your business, having a plan to transfer your assets upon death, or even managing your debt.

It is a lot more than just investing.

Myth 6: “I don’t need to have a plan until something happens”

FACT:  If your financial circumstances suddenly change – whether you lose your job or win the lottery – it’s vital to get some proper financial

advice on your next steps.

But planning ahead on how you’ll cover or capitalise on those unexpected events is even better. A good financial plan isn’t simply about stocks and shares. It could include plans to fund long-term care, put cash by for unexpected emergencies, or taking out health insurance. And proper, long-term advice supports you in the good times, and the more challenging times.

Myth 7: ”I need to keep my money in a savings account”

FACT: If you keep all, or most of your money, in a savings account, you need the interest rate to be higher than the rate of inflation. Otherwise, your money will be losing value in real terms.

It’s a good idea to keep some cash in an easy access savings account just in case you need to find some emergency funds to cover an unexpected expense. But, it may be worth exploring other investment opportunities for the portion of your funds earmarked for long-term goals to make your money work harder for you.

How we can help

We deliver a highly personal experience, providing you with expert help and holistic advice in a long-term relationship. We can talk you through the full range of options available and create a bespoke solution tailored for you. Get in touch today.

An investment or pension with SJP will be directly linked to the performance of the funds selected, and may fall as well as rise.

An investment in equities will not provide the same security of capital associated with a bank account.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances. You are advised to seek independent tax advice from suitably qualified professionals before making any decision as to the tax implications of any investment.