Financial advice comes from all directions — friends, family, social media, even the occasional well-meaning stranger you meet at a braai. Some of it is solid, some of it is harmless, and some of it, unfortunately, can be quietly damaging to your long-term financial health. What makes the latter so dangerous is that it often sounds sensible. It’s often been repeated so many times, or packaged so persuasively, that it feels like an established truth. In this article, we share the most common examples of perceived ‘good advice’ that we’ve come across.
1. ‘All debt is bad debt’
Debt can be expensive, stressful and risky if mismanaged – and it’s easy to understand why this one persists. But lumping all forms of debt into the same category ignores the role that strategic borrowing can play in creating long-term wealth. For example, a well-structured home loan allows you to own an appreciating asset while benefiting from capital growth over time. Similarly, a carefully considered business loan can provide the working capital needed to expand operations and increase earnings.
The danger of the “all debt is bad” mindset is that it can lead people to avoid useful leverage altogether, or to settle low-interest loans early at the expense of building an investment portfolio with higher potential returns.
Better approach: Learn to distinguish between productive debt (such as that used to acquire appreciating or income-generating assets) and unproductive debt (for example, debt used for consumption). Manage the former responsibly and pay down the latter as quickly as possible.
2. ‘Your home is your best investment’
Owning the property you live in can provide stability, pride of ownership, and the potential for capital growth – but the idea that your primary residence is your ‘best investment’ overlooks some fundamental realities. Firstly, a home that you live in generates no income, comes with ongoing costs such as rates, maintenance and short-term insurance, and its capital appreciation may not outpace inflation over the long term. This advice can lead people to channel most of their wealth into property, leaving them asset-rich, but cash poor – with little liquidity for emergencies or other investment opportunities.
Better approach: Our advice is to think of your home as a lifestyle asset, not a retirement plan – and to balance property ownership with a diversified portfolio of growth assets that can generate income and capital growth over time.
3. ‘Always buy in bulk to save money’
Buying in bulk can be cost-effective for certain non-perishable goods, but this advice falls apart when it encourages unnecessary spending or waste. Stockpiling items you rarely use, or buying perishable goods that expire before you can consume them, erodes any potential savings. On a larger scale, this mentality can influence investment decisions such as ‘buying in bulk’ during a market dip without considering asset allocation, diversification, or your longer-term goals.
Better approach: Our advice is to be strategic about all purchases. Bulk purchases should be limited to items you know you’ll use before they expire and that you can store without damage. In the context of investing, make sure that every purchase fits into your broader plan and is not just driven by price.
4. ‘Cash is king’
In times of uncertainty, holding cash feels safe. This is because cash is liquid, stable, and unaffected by the daily movement of markets. But, holding too much cash for too long exposes you to a less visible risk: inflation. Over time, the purchasing power of cash erodes, meaning that your ‘safe’ money is quietly losing value. This mindset often keeps people from investing, especially after experiencing market volatility. They sit in cash for years, missing out on the compounding growth that comes from being invested in inflation-beating assets.
Better approach: Our advice is to keep enough cash to cover an emergency fund and short-term spending needs, and to invest the rest in a diversified portfolio that matches your time horizon and risk tolerance.
5. ‘Renting is throwing money away’
This advice overlooks the flexibility and potential financial advantages of renting. In some cases, renting frees up capital that can be invested elsewhere for higher returns than property ownership might deliver. Further, renting rather than purchasing property can be financially prudent when property prices are overheated, or when your life circumstances make mobility more valuable than home equity. The blanket assumption that ‘rent is wasted’ can push people into buying prematurely, often stretching themselves financially, paying high transfer duties, and shouldering maintenance costs they’re not ready for.
Better approach: We believe that it’s important to weigh the total costs of renting versus owning in your specific set of circumstances. Property ownership may make sense when you plan to stay in one place for the medium to long term and can afford the hidden costs of ownership.
6. ‘You should withdraw your pension when changing jobs’
This is one of the most financially damaging myths, yet it’s surprisingly common. Withdrawing your retirement savings mid-career not only triggers immediate tax but also robs you of years of compounding. Even relatively small withdrawals can leave a significant gap in your retirement funding that is difficult to recover from later.
Better approach: Ideally, preserve your retirement savings by transferring them to a preservation fund or your new employer’s retirement fund. If you keep your long-term goal of financial independence in retirement front-of-mind, you are more likely to treat those funds as untouchable.
7. ‘You can’t go wrong with property’
While property can be a valuable part of a diversified portfolio, it’s important to keep in mind that it’s not without risks. Property values can stagnate or fall, rental income can be disrupted, and the costs of ownership – from levies to ongoing upkeep – can erode returns. The bottom line is that concentrating too much wealth in one or two physical assets also reduces diversification and liquidity.
Better approach: Our advice is to treat property like any other investment. Analyse the potential returns, factor in costs, and understand the risks – and then balance property with other asset classes to reduce concentration risk.
8. ‘You need a lot of money to start investing’
The belief that you need money to make money is outdated and keeps too many people on the sidelines. The reality is that the rise of unit trusts, exchange-traded funds (ETFs), and tax-free investment accounts means you can start building an investment portfolio with relatively small amounts – and waiting until you ‘have enough’ often means missing years of potential compounding growth.
Better approach: Find out what the investment platform’s minimum contribution level is and start with what you can. Add to your investments consistently over time and increase your contributions as and when you are able. The habit of investing early matters more than the initial amount.
Bad advice often persists because it contains a kernel of truth that people hold on to. Debt can be dangerous, property can build wealth, and cash is important – but only in the right contexts and with the right strategy. The danger comes when these ideas are applied without nuance, crowding out better options or leading to poor decision-making.
Sound financial advice is rarely one-size-fits-all. It takes into account your goals, resources, risks, and personal circumstances. Before acting on any advice — no matter how sensible it sounds — take the time to run the numbers, weigh the trade-offs, and, ideally, consult an independent financial planner who can help you separate myth from meaningful strategy.
Have an amazing day.
Sue
