Serious misconceptions about personal finance which are irrelevant today
Myths regarding personal finance are vast.
You will be surprised to know that the concept of personal finance came since the existence of money. The concept of managing personal finance has been changing every year. With new schemes and many savings as well as investment options, people should know the details about personal finance. Those things depend on the situation, a person is going through. Personal finance largely depends on the decision taken by the person at the correct time. This article is intended to rectify the misconceptions about personal finance.
Myth: Credit Cards are used during emergencies only.
Fact: This is a wrong concept. Some people believe that, as long as you have an adequate balance on your credit card, there is absolutely no requirement of any emergency fund. Unfortunately, this is not the truth. An emergency fund is required always in your lifetime. If any person losesa job, he/she will not be able to pay any EMI or rent using a credit card. Even, a major car repair bill cannot be paid by credit card. So, an emergency fund is mandatory. At least, the emergency fund can support you for 2-3 months, which a credit card cannot do. If one person loses a job, he/she will have some valuable time to search for another job while utilizing the emergency fund.
Myth: You have to be a rich person if you wish to invest somewhere.
Fact: You no need to be the richest to invest in somewhere. Even with a small amount, you can invest in many places. First, you need to be well aware of the investment plan and opportunities. You can easily invest as low as 500 rupees monthly through SIPs in various mutual funds. Nowadays, investment has become as easy as shopping online. The basic concept of becoming rich is not dependent on your earnings, it lies in how much you are able to save at a time. Thus, professionals always suggest starting investing in small amounts. It will bring some consistency for a long time. You will be able to build a sizeable amount.
Myth: Gold is the smartest investment
Fact: This is an age-old misconception. Gold is regarded as the smartest investment by many people. Definitely, gold is an important asset, which is volatile. The rate of gold is against the trend of the stock market. Considering, the lockdown situation, and other economic crises, gold is not as a safe option as it was considered earlier. So, investment in gold can be tricky.
Myth: Never, take loans, they are not good.
Fact: Loans are not always so bad. By taking a certain amount of loan, you can create your wealth even if you have restricted financial potential. Sometimes, people wait to buy an asset without taking loans, but, during this waiting period, the price of an asset may increase more. So, you can take loans if you get affordable EMI options.
So, do not let those misconceptions take away your financial freedom from you. You must plan for the future with a lot more financial freedom.