Following These 5 Financial Myths Will Cost You

You know when you were little and your mother made you wear a coat even though it was only slightly cool? Remember how that was supposed to stop you from getting a cold?

Your mother’s heart was in the right place, but there’s little evidence that getting cold makes anyone more likely to catch a cold or flu. The whole myth probably started when people noticed that we are much more likely to end up sick during winter. There’s a number of reasons why this is true, including spending more time indoors, because our immune systems aren’t quite as effective in the cold, and because cold and flu viruses like cooler weather.

Falling for something like that isn’t such a big deal when all you’re doing is putting on a jacket when you probably should be wearing one anyway. It’s when you start falling for myths that end up costing you money is when the big problems start.

Here are five financial myths that are making your wallet lighter.

Oil changes

Although it’s not nearly as prevalent as it used to be — thanks to new cars that tell you when to get your oil changed — there are still thousands of people out there who blindly believe that nice sticker in the window that suggests they get their oil changed every 3,000 miles (or 5,000 kilometers for the Canadians in the house).

Modern engines are much more efficient than the last generation of gas guzzlers. Depending on your car, you can easily get away with going 7,000 miles without changing the oil. That adds up to twice as many oil changes in a car’s life. At $40-$50 per shot, this is not an insignificant cost.

Buying the best

Often, I’ve seen the argument that buying the best model of something is the most cost effective over the long run, since it’ll end up lasting longer.

Reality is far more complicated. Beats headphones are $200 for a cheap pair, which should indicate they’re pretty good quality. But according to many experts in the field, it’s easy to get $50 headphones that sound better. Many humans can’t even hear well enough to tell the difference between good and great headphones anyway.

Headphones are just one example. There are dozens more. Price and quality aren’t necessarily a direct relationship. Too many people believe they are.

Keeping a balance helps your credit

The inner workings of credit are a secret to everyone except a select few employees at the Equifax Corporation. Apart from following a few basic rules, we’re all basically guessing at how much we affect our credit.

I’ve seen advice telling people not to pay off installment loans because having an active and up-to-date loan helps out your credit score. That might be true, but what a silly thing to do. It’s essentially the equivalent of paying to have slightly better credit.

Unless the loan is at 0%, just pay down the debt. Don’t worry, your credit will still survive.

You need life insurance

Most adults should have some sort of life insurance, especially if they have dependents.

But at the same time, taking the advice of a life insurance agent to determine how much insurance you need is dangerous. To an insurance agent, every potential problem needs to be insured. These people even recommend getting insurance now not because you need it, but because you might not be able to in the future. Essentially, that’s just buying insurance on the ability to get insurance. What a waste.

Getting life insurance is fine, assuming you need it. If not, hold off. The chances of you qualifying now and then not qualifying five years from now are slim.

Buy what you know

One of the most common pieces of advice for rookie investors is to buy stock in companies they use regularly. Thus, portfolios are stuffed with names like Coca-Cola, Microsoft, and Loblaws.

There are a number of issues with this advice. Your portfolio will likely be overweight with consumer stocks. And it likely won’t have much growth, since big companies can no longer count on double-digit revenue increases.

It also doesn’t consider valuation. A great company can still be a crummy investment if you buy it when it’s overvalued.

Using FX Trading To Make Money on the Side

The worldwide forex market boasts over £2.64 trillion in daily trading volume, making it the largest market in the world. FX entices traders of all levels due to its ease and simple format, from complete rookies to veteran traders, everyone is having a go. Around-the-clock sessions, access to significant leverage and relatively low costs make it a great prospect for earning some extra cash.

This article will take a look at 5 ways for novice traders to ensure they stay profitable and avoid going into the red.

  1. Do Your Homework
    Forex is easy to get to grips with but extremely tough to master. Learning about forex is crucial to success. While the majority of learning comes from experience, a trader should research everything possible about the markets, geopolitical and economic factors that drive currency values before diving in.It’s important that you have a basic knowledge allowing you to make informed decisions and adapt to changing market conditions.
  2. Use a Practice Account
    The vast majority of trading platforms come with a practice account, demo or simulation account. These type of accounts allow traders to place hypothetical trades without risking any real money. This allows you to get to grips with the basic format of a forex trade along with getting a feel for the software.

There are few things are as damaging to your confidence or account than throwing all your money down the drain on your first trade. Getting to grips with a practice account will save you having to fumble around when real hard cash is on the line. Multiple errors in succession can lead to devastating financial implications so practice is imperative!

  1. Start Small

Once you’ve done your homework and you’ve got to grips with a practice account, it’s time to put your money on the line. No amount of practice can ever prepare you for the real thing so it’s vital to start small when going live. It’s a completely different ball game once real money is at stake, simple decisions become much tougher as your risks now have very real consequences.

Emotions and slippage cannot be fully accounted for until you’ve started live trading. Additionally, a strategy that worked a charm when practicing can easily fall short when reallyput to the test. By starting small, a trader can evaluate his or her decisions and emotions allowing them to gain valuable real world experience without risking their whole account.

  1. Keep Good Records 
    Maintaining a trading journal is a great way to learn, both from your losses and successes. Recording dates, profits, losses, your performance and emotions can be incredibly beneficial to in the long run. Without a good journal/record traders are likely to continue making similar mistakes, minimizing their chances of being profitable and successful.
  2. Treat Trading As a Business
    It‘s essential to treat your account as a business, remembering that individual wins and losses don’t count in the short term; it’s how you perform over time that is key. As such, traders should try to avoid becoming overly emotional with either wins or losses, and take both in their stride. Like any business, trading incurs expenses, taxes, risk, losses and uncertainty, along with the fact that like a small business your account will take time to grow and mature. Planning, setting realistic goals, staying organized and learning from both success and failure will help ensure a long, successful career as a forex trader.

Conclusion

Forex trading can provide a great opportunity to create a little extra cash as long in a quick and easy format. When approached as a business, forex trading can be profitable and rewarding, stayingfocussed, organised, emotionally resilient and determined are all key to a successful career. If you’re interested in finding out more about FX trading then visit http://www.etxcapital.co.uk/ for more information.