Over a year ago, I wrote an article Busting 6 Financial Myths. Unfortunately, that did not suffice! I continue to come across more and more misconceptions about finance and investing that I need to clear up.

So, welcome to Part 2 of Busting Financial Myths! Let’s get started.

A myth that is widespread: my money is safest sitting in a bank account

Only 1/3 of millennials are investing in the stock market. Millennials ARE saving. They just aren’t investing. Who can blame them? Memories of the 2008 mortgage crisis still haunt them. They really shouldn’t be afraid of the stock market though. Read my thoughts HERE on how risky the stock market actually is.

What you should fear is your money doing nothing. And that’s exactly what it’s doing in a bank account… NOTHING. Outliving your money is the real risk. A diversified investment portfolio can help prevent that from happening.

A myth that people seem most convinced of: you don’t want all your eggs in one basket

This idiom is true in some regards. When it comes to investment diversification, you don’t want all your eggs in one basket. You want various large cap stocks, small cap stocks, internationals, emerging markets, etc.

However, I also hear this phrase when discussing financial advisors. I’ve seen people who think diversification is working with 3 or more different financial advisors. In reality, all 3 advisors are giving contradicting advice, employing strategies that work against each other, or even investing in the same exact thing, leading to overconcentration.

One advisor does not necessarily need to have discretion over all your money. However, at least one trustworthy advisor needs to have a full understanding of all your accounts and finances in order to give advice that is comprehensive and most suitable for you.

A myth that makes the least sense to me: you don’t want to lock your money up in a retirement account, because you might need it before then

Again, this makes a little sense. After all, the best lie is based on some truth. I’ve heard people say you shouldn’t put money in a 401(k) because you might need your money before age 59 and 1/2 and what then?? You might have to take the money out and pay taxes and a penalty? You should just keep your savings in cash.

They’ve got it all wrong.

Broadly speaking, you should always contribute enough to earn your employer match. If your employer matches 5% then you should put in at least 5%. It’s an instant 100% return! Even if you really had to take some money out a month later, you’d come out ahead.

The penalty you pay is less than the 100% return you just received from the employer match, so you still made more money by contributing.

Side note: You DO need a cash emergency fund, so please don’t put every bit of your money in your 401(k).

A myth that is dangerous: Social Security should cover most of my expenses

Social Security is not meant to give you a luxurious retirement lifestyle. In fact, the average Social Security benefit is about $1,500 a month. That is only $5,600 above poverty. You need to be saving now to supplement that income.

A myth that is new: I can spend all these monthly payments I am getting for the Advance Child Tax Credit

Some people can spend it, but think through your situation first. If your family life changed (perhaps you are divorced and a child splits time with parents), you might have to pay back what you received.

You might have been counting on the extended credit to get a tax refund or at least reduce your taxes owed. Since half of the credit is being paid in advance, that expectation might not be a reality. You might consider saving some of these advance payments if you tend to owe taxes.


Everyone with a Robinhood account seems to think they are an expert, and they aren’t holding back from doling out “advice.” Recognize that someone else’s experience with investing and finance might be entirely different than your own.

Look through the myths and find an expert to share your thoughts, concerns, and goals with. Have you heard of any other myths not already addressed? Email me HERE and they might make it on Part 3!