When it comes to conventional wisdom, what most people don’t realize when they’re following it is that there are costs associated with the decisions that we’re making every day. These tiny decisions we make make a big impact over time, and that’s exactly why we’re going to dive into those hidden costs of following traditional financial advice today.
So you mean to tell me that free advice isn’t free? It’s funny because the media puts out all of this conventional wisdom of things we should and shouldn’t be doing with our money as if they’re moving us forward and not in their own best interest. There are hidden costs, and that’s such a great topic because conventional wisdom or traditional financial advice is rooted in risk or volatility. Basically, what’s happening is you’re being sold or positioned to expose your money or your wealth to risk and volatility—things, by the way, over which you have very limited, if any, control. That goes totally against what we talk about here. We are always talking about how we could put you in control of your money and how we can make that money as efficient as possible. By exposing that money to risk exclusively, you’re absolutely out of control. We don’t necessarily have control over the efficiency either because there are taxes and laws associated with each different type of account.
In order to make your money more efficient, oftentimes, especially with what we talk about, we step back from the conventional wisdom. We step back from the conventional way of financing, saving, and using our money to put ourselves in control instead of following that conventional wisdom, which leaves the control out of our hands. If I’m doing financial planning and I have a specific goal in mind, I know what the goal is, and I want a surefire way on how to get there. I don’t want to risk my way to that reward or the possibility of that reward because the last thing we want is to put all of this money away for all of this time and not be able to achieve that goal even though we played our part.
The rules can change, or the markets can change. Maybe you don’t want to take risks or expose your money and wealth to volatility. There’s another hidden cost: taxes. Once you’re putting your money away, your goal is to get a high rate of return. Is that really the goal? At the end of the day, the more you make, the more Uncle Sam takes. You’ve got a partner in that account, and that’s something that most people don’t take into consideration. Right away, you’re exposing yourself to risk and taxes that you may not have been exposed to had you not followed conventional wisdom. Not to mention inflation and high-interest rates.
Traditional financing also leaves you out of control with blatant costs like interest rates and hidden costs like not being able to save or access that money again and not feeling financially free. Paying off a mortgage quickly is often seen as wise, but is it actually moving you forward financially? Home equity isn’t necessarily liquid. It’s the bank’s decision to let you access it, not yours. If the rules change, or something happens where you’re unable to qualify, you’re left without options.
Additionally, following conventional advice often exposes you to regulation changes that are beyond your control. Rules made in Washington can directly impact you. We always talk about control, efficiency, and saving in a place you own and control, like a specially designed whole-life insurance policy. This allows for guaranteed growth, opportunities for non-guaranteed growth with dividends, and a framework where the rules are laid out clearly in a contract. Saving conventionally often means strong dollars today are being put away to retrieve weaker dollars in the future, given the effects of inflation.
Not being able to access the money along the way is a major challenge. Financial goals like buying a house, sending kids to college, or starting a business all require money, and inflation makes everything more expensive. Having access to money throughout your financial journey is critical. Putting it in places subject to regulation, taxes, and market risks limits your options.
The answer is to protect yourself from risks: losses, taxes, regulations, and inflation. Various strategies and places can help you do this, and we can guide you to find the best fit for your situation. If you’d like to learn more visit our website Tier1capital.com to book a free strategy session today! And remember, it’s not how much money you make—it’s how much you keep that truly matters.
