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Top 10 myths about financial planning

The financial industry has traditionally been flooded with myths, lies and untold truths. It’s hard for most people to figure out what’s what. That’s why we’re here to break down 10 of the top misconceptions about financial planning:


1. Financial planning is only for the wealthy

Many people still believe that financial planning isn’t for them because they don’t make a certain amount of money. This couldn’t be further from the truth. Financial planning is for everyone, regardless of income, social status or spending habits. However, it is true that traditional financial planning was reserved for the wealthy due to its high cost. Those days are long gone thanks to low-cost (mainly) digital services like Planswell.


2. You need to already have savings and investments

This belief prevents many people from getting started with a financial plan. In fact, everyone starts at the same place – with $0 until they make their first investment. The key here is to get started as soon as possible, regardless of the amount you have sitting in your bank. Your plan will tell you what you need to do on a monthly basis to not only maintain your lifestyle, but to reach your goals.


3. A financial plan is only about investing

Absolutely not! If this is what you’ve been told by your current financial advisor, then you’ll want to seriously reconsider that relationship. A good financial plan goes beyond the investment side of things to help you minimize your borrowing costs. Not only that, a good financial plan will protect you and your family by making sure the proper insurance is in place.


4. A financial plan is pretty much just a budget

While there might be some overlap between your budget and your financial plan, it’s important not to confuse the two. Your (Planswell) financial plan will give you clear recommendations to optimize your borrowing, investing and insurance so that you can maintain your lifestyle (and budget) into your future. If budgeting is your thing, we do have a fancy budget calculator to help you take control of your monthly spending habits 🙂


5. Once you create your financial plan, you’re set for life

Your plan isn’t and shouldn’t be a “one and done” type of thing. It requires upkeep. As life progresses and things change, so too should your plan. We recommend updating your plan every six months. These small but regular adjustments reduce the risk of things going off the rails, and massively increase the chance of reaching your goals.


6. Financial planning is expensive

If this is what you’re thinking then you’re probably going to an advisor who is charging $3000 for a plan, or putting you into mutual funds and other products that charge 2% or even 3% every year, kicking usually 1% back to the advisor. So yes, that is quite expensive – however it shouldn’t be and doesn’t have to be that way. Planswell Portfolios uses ETFs with an average fee of just 0.17% per year bringing your total cost to .57-.67%, which can save you hundreds of thousands of dollar over your lifetime.

7. You need to go to the bank for your mortgage

That’s exactly what the big banks want you to believe, but the reality is there are dozens of sound mortgage lenders in Canada. Shopping around is always in your best interest. Run if they use fear to promote fixed rates, and remember not to accept the first offer sent your way because it’s likely you’ll get a better mortgage if you hold out a bit.


8. You need an insurance agent

Again, just like the above with your mortgage, it’s important to shop around for your insurance to find the right policy to fit your needs and your budget. This doesn’t have to be a separate insurance agent who is disconnected from the other aspects of your financial life. At Planswell, we connect your insurance with your investments and borrowing to help you maximize the value of each part.


9. You can only get a plan from an advisor

Long gone are the days where you’d need to meet with your advisor in person to go over your financial plan, and thankfully so. Would you rather spend countless hours and multiple meetings to create your financial plan or do it all for free online in less than 3 minutes? We’d like to think it’s a no-brainer. 


10. A financial plan only focuses on my retirement

A good financial plan focuses on all of your personal and financial goals, not just retirement. Your financial plan makes it easier to reach your short and long-term financial goals because you have clear and measurable targets to reach.


Busting the financial myths

While financial myths swarm the industry, there is a lot of good, unbiased advice that you can find without having to look under a rock. At Planswell, we’re helping Canadians like you take control of your personal finances so you can feel better about your money.


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