5 Financial Myths that Need to Be Debunked

Posted in Investment By Friyana Munshi - Jan 21,2023
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We all are afraid of many things in our lives. The fear of heights, closed spaces, and thunderstorms is quite common. But there is something that all humans fear the most and that is failure. Imagine failing at your finances. It’s a scary thought, especially when money is involved! The possibility of failure makes monetary planning seem so overwhelming. You assume that scaling this mountain is just not up your alley. And then starts the game of advice. The right advice will definitely help, but one wrong piece of advice can get you into a mess you probably aren’t ready for.  

There is nothing wrong with taking some good advice from the experienced. However, it is crucial that you realise that their age-old tips might not be applicable in today’s progressing world. This makes their words more of a myth than advice. And while their opinions ought to be respected, it’s time we broke some of the prevailing financial myths to help you build a better corpus which is in line with the advancing world.  

1. Saving in a savings account is enough 

Risking your money in the greed for more has been looked down upon for years. It’s time that your idea of savings changes with the changing tide in world economics. We always reach out to our bank accounts for all our requirements where your stagnant savings keep depleting. An effective way to ensure financial security is to keep multiplying your savings. You might argue that you have invested in fixed deposits where your funds grow gradually and with assured security. But what if that isn’t enough? With rising inflation and the uptick in prices of everyday commodities, your matured deposit might not be enough. 

Let’s understand this with a small example. Let’s assume you opted to save a lump sum amount in a fixed deposit at your trusted bank at 5.5% interest. But what happens when inflation hikes up and surpasses the 6% mark? You lose out on your purchasing power. In today’s day and age,  one must take limited risks with their funds and multiply them constantly to enjoy a better standard of living. Various investments like mutual funds, ETFs and so forth allow you to benefit from higher returns compared to traditional savings options.  

2. You can start saving for your retirement after 40

Now that we have broached the subject of savings, their growth, and investments, let’s take it a step ahead. Have you thought about sustainability in your retired life? No, don’t push aside this important question for later. The earlier you start planning, investing, and earning, the more monetary benefits you can enjoy in your retired life. The age-old belief suggests that you can start thinking about retirement funds after the age of 40, but it has been observed that this isn’t the wisest. 

There are several ways to ensure that you have the perfect retirement corpus, but the efforts for these must start now. Rising inflation and macroeconomic changes are bound to strain your finances in the long run. As per the current trend, it is advisable to start saving up for retirement right from your 20s to amass more wealth and lead a peaceful retired life. If you save up enough, you could even retire early. If you use the ‘Financial Independence, Retire Early’ (FIRE) principle and engage in aggressive saving and investments of about 50% to 75% of your income, you could very well retire in your 30’s. So, don’t wait for the sun to set on the numerous possibilities and start allotting funds towards your retirement. 

3. Ownership is always better than rentals

We all wish to have a sweet abode we can call our own. But not everyone can afford to purchase the home of their dreams. The maintenance fees and other charges applicable for homeowners can be a constant load on your finances. Rethink owning a house, especially if you plan to purchase the property using a home loan. Paying for the monthly instalments can thin out your finances over the years. Appreciation of property takes a few years; hence, the real profitability of your estate will only shine through after a decade or more. If you wish to own a home as an asset, then you have some time before you can reap the benefits of this investment. However, during emergencies, owning a house gives you the option to liquify the asset, shift into a smaller place, and take care of the unwarranted financial requirement.  

If your finances can’t handle a huge expense like buying a house, then renting is not such a bad option. You do not have to pay additional charges for maintenance regularly. Moreover, the cost of fixing minor inconveniences like a leakage or changing the inverter battery, all fall on your landlord. By renting instead of purchasing property, you can divert your additional funds towards investing and building emergency funds for the near future. Make the decision based on your future monetary goals. Owning a home is a blessing, but renting should not be completely disregarded.  

4. You don’t necessarily need an emergency fund 

Salaried individuals might assume they are secure if they have a regular income, insurance policies, and some savings in their mutual fund and FD portfolios. It is easy to neglect the importance of a good emergency fund. If you think so too, you are probably wrong, and here’s why. What if you are travelling abroad and meet with an accident? In case your insurance does not cover medical treatments in a foreign country, what will you do? Or let’s consider another scenario. A pandemic pushes the world economy into a recession which leads to you losing your job. The danger of this coming true is near and real. 

Having an emergency fund that is easily accessible is extremely crucial. It can provide you with assistance to curb the impact of such sudden expenses on your savings. A liquid cash flow is essential to get out of such urgent situations. You can also invest in easily liquefiable assets like gold to help you get through any disastrous event in your professional or personal life. Ensure that these emergency funds are accessible by your loved ones and contain enough money to handle at least 6 months’ worth of household expenses.  

5. Good credit score guarantees best loan rates

This myth does hold some weight but is only partially accurate. A great credit score indicates great financial responsibility. Even though your credit score is one of the crucial factors in determining your loan rates, it is not the only factor taken into consideration. Along with financial responsibility, your lender also looks at your monetary status to ensure that you can repay the borrowed amount. A good credit score does strengthen a borrower’s case. However, your annual income, employment history and current credit amount, also play a vital role in determining your loan rates. Along with your essential credit score, an outstanding financial status is also vital to getting the best loan rates. 


We hope to have eliminated some misconceptions regarding finances from your mind. Don’t disregard the advice you get from those experienced in the field, but also consider current economic conditions and your end goals before acting on them. Failure is not an option, especially with the number of responsibilities you carry on your shoulders. With this new-found knowledge, let’s explore the innumerable financial possibilities and win the game of life. 

Ready to achieve your monetary goals? Then visit the Bajaj Markets website or app to get the best of offers on investment and savings options! Find plans under mutual funds, FDs and more and select the option that suits your financial requirements! What are you waiting for?  

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