From posts on social media, to the morning news shows, to well-intentioned friends and family, everyone seems to have a financial “hack” to share. It’s hard to tell good advice from the bad when it’s nicely wrapped in a pretty package! For example, a photo of a beautiful beach house with tips about getting ahead on your mortgage and reducing the 30-year loan by a few years. The reality is paying every two weeks instead of every month adds up to one or two additional payments a year – that’s all!

Here are a few examples I recently encountered:

“Never Use a Credit Card” – Your credit score is made of a few key components: revolving credit, installment credit, payment history, and account history. Revolving credit includes credit cards, HELOCs, and additional types of credit lines. This is one of the fastest ways to boost your credit score! Rather than avoiding the cards altogether, better advice is to establish a regular habit of paying off the statement balance monthly. It takes discipline to track your spending and pay it in full, but your credit score will reflect that hard work.

“Pay off all your debt before investing” – Lets start at the top – not all debt is bad! Especially in today’s high interest rate environment, those of us lucky enough to have low mortgage interest rates should not be paying off our homes early. Those extra payments you’d make would be better off in a High-Yield Savings Account earning 5% rather than paying down 3% interest on your mortgage. Additionally, the effects of compounding interest only work when you give the investment time to grow. I think of the common illustration of a 20-year-old who saves only $30k for 10 years versus the 40-year-old who saves $100k for 25 years and still ends up with less at retirement. Time is the one component you cannot replace in investing. Start early and balance paying down debt with saving for your future.

“Invest in funds with guaranteed returns and no downside risk” – I read an article recently that referred to this kind of investment as “Boomer Candy”. The fund is promising a 5% return with minimal/no downside, but you give up the potential growth of the whole market! If the market makes 20%, you only get 5%. The gimmick is that if the fund goes down 20%, you are protected. With CD rates at nearly 5%, why not just invest on your own, no need for a fancy product.

So how to tell bad advice from good? First, consult your financial advisor. We welcome these kinds of questions as it educates us and you! Second, use your intuition. Typically, “get rich quick schemes” are just that, schemes designed to prey on the hopes of the masses. Finally, remember that financial advice is very personal. There’s no one-size-fits-all path to financial independence. The advice given to your neighbor, friend, or work colleague may be right for them and completely wrong for you.