Fact vs. Fiction Archive:

• Fiction: A quick way to figure out how much equity exposure belongs in your portfolio is to subtract your age from 100.
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• Fiction: Giving away things such as jewelry, art, and valuable collectibles is a smart way to avoid the gift tax.
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• Fiction: Insurance obtained through work provides adequate coverage for most people.
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• Fiction: Investment management/advisory fees are not tax-deductible.
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• Fiction: My credit score doesn't affect anything but my ability to get more credit.
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• Fiction: Medicare will cover my expenses if I need a nursing home or other care as I get older.
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• Fiction: High-income families don't qualify for financial aid.
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• Fiction: Estate planning is for old people. I'm too young to worry about it.
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• Fiction: I can manage my finances on my own.
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• Fiction: I have a will; that should cover everything.
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• Fiction: I completed my estate plan. I don't need to deal with it again.
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• Fiction: We have money and assets saved for our child's college education, so we won't get any financial aid.
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• Fiction: Financial plans only make sense for people with a lot of money and/or other assets.
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• Fiction: I won't need life insurance until I'm old.
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• Fiction: If I have to, I can use my house to finance my retirement.
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• Fiction: A trust automatically avoids probate.
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• Fiction: I don't need to start saving for retirement until later in life—I've got plenty of time.
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• Fiction: I should name my estate as the beneficiary of my IRA/life insurance.
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• Fiction: Saving for my kids' college tuition comes first.
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• Fiction: Investors should only buy and hold.
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• Fiction: Giving away my money is the only way I'll qualify for Medicaid.
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• Fiction: Since the housing market is in a slump, I should buy now while the prices are low.
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• Fiction: Skipping a year of IRA or 401(k) contributions will not make that big of a difference when I plan on retiring.
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• Fiction: Investing in alternative energy is the wave of the future and something I should do with a large portion of my investment dollars.
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• Fiction: It is safe to depend solely on social security when you retire.
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• Fiction: When shopping for a mortgage, the lowest quote is always best.
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• Fiction: I should start receiving my social security benefits at age 62, as soon as I'm eligible.
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• Fiction: Young people don't need to worry about taking on risky investments.
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• Fiction: $1 million is a lot of money and plenty for retirement.
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• Fiction: Alternative investments are another way of saying investments that are too risky.
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• Fiction: I should take advantage of the ability to spread the tax on my Roth conversion over 2011 and 2012.
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• Fiction: I can pick and choose which Traditional IRA I would like to convert to a Roth IRA in order to avoid paying any taxes.
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• Fiction: The best type of IRA is a Traditional IRA because contributions are tax-free.
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• Fiction: The only way to save for a child's education is to utilize a 529 college savings plan.
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• Fiction: Investors should abide by the maxim, "Buy low, sell high."
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• Fiction: My mortgage interest is based on the current month (i.e., in December, I'm paying December's interest; in January, I'm paying January's interest), so there is no tax deduction benefit in making my January payment in December.
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• Fiction: Budgeting is for people who don't have much money.
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• Fiction: If I have life insurance through work, I don't need additional life insurance coverage.
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• Fiction: When the market is volatile, the best strategy is to move to cash and wait until things improve before getting back in.
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• Fiction: When considering an insurance policy, you should look for the lowest premium to save money.
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• Fiction: My income needs in retirement will be less than they are now, so I should base my retirement planning on that expectation.
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• Fiction: I can't use my life insurance policy to give to charity.
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• Fiction: I only need to worry about my credit score if I'm purchasing a house and need a mortgage.
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• Fiction: If I'm downsized at my job, I will have to go without health insurance until I get a new job.
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• Fiction: The most important consideration when starting a small business is the source of funding.
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• Fiction: I don't have a lot of money, so I don't need a will.
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• Fiction: If I switch jobs, it makes no difference whether I move my 401(k) or other company-sponsored retirement plan assets to my new job, or if I leave them with my previous employer.
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• Fiction: Only an unintelligent person would fall victim to a Ponzi scheme.
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• Fiction: One of the great benefits of buying a home is that you can deduct the cost of home improvements from your taxes.
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• Fiction: Once I've completed my financial plan, I don't have to worry about it again.
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• Fiction: I have to invest in a 529 college savings plan sponsored by my state of residence.
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• Fiction: I should claim fewer withholding allowances than necessary on my form W-4, so I receive a big tax refund every year.
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• Fiction: 529 college savings plans require that students attend in-state public schools.
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• Fiction: If my housecleaner gets hurt while cleaning my house, I am not responsible for paying for her injuries.
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• Fiction: I am always better off if I buy term life insurance and invest the difference.
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• Fiction: I don't need an attorney to prepare my will. I can use a do-it-yourself website or a form purchased in an office supply store.
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• Fiction: The only insurance I need is my automobile policy and my homeowner's policy.
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• Fiction: I am too young to worry about what will happen to my business if I die.
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• Fiction: I don't have enough assets to worry about having a prenuptial agreement, and I don't want to hurt the feelings of my prospective spouse by bringing up the subject.
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• Fiction: Beginning in 2011, I will be taxed on the value of my employer-provided health insurance.
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• Fiction: The only benefit to consolidating my various IRAs is having a single statement.
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• Fiction: Buying property is better than renting.
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• Fiction: There's no chance I will get audited.
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• Fiction: Filing for bankruptcy means I will lose my home.
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• Fiction: Ponzi schemes were in the news at one point, but only fools fall for those scams.
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• Fiction: If an error on my tax return is caused by a third party (e.g., my bank reporting mortgage interest incorrectly), I'm not responsible for the mistake or any penalties resulting from it.
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• Fiction: If I make more money, I will be taxed more and end up having less money.
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• Fiction: A late credit card payment isn't a big deal; it won't affect my credit score.
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• Fiction: All blue-chip stocks are low risk.
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• Fiction: The least expensive insurance policy is usually the best.
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• Fiction: Beginning in 2013, I will be taxed on the sale of my home.
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• Fiction: Meeting with a financial advisor is too costly.
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• Fiction: I am fully protected by my landlord's insurance.
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• Fiction: I am not accountable for my debts because I'm under 18.
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• Fiction: Not signing the back of my credit card will prevent identity theft.
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• Fiction: You can be a successful investor without assuming risk.
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• Fiction: As a result of my divorce, my former spouse's standing as my annuity beneficiary is automatically revoked.
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• Fiction: My will covers everything I own.
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• Fiction: Declaring bankruptcy will discharge me from all of my debts.
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• Fiction: Investing is similar to gambling; you don't know how things will turn out.
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• Fiction: Social security only applies to retirement.
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• Fiction: If I file for bankruptcy, I could lose my job.
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• Fiction: Phantom stock is stock.
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• Fiction: If I decide to work past retirement age, my income will cause me to lose my social security benefits.
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• Fiction: Business valuation isn't useful unless I'm planning to sell my business.
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• Fiction: If I leave my job, I keep my life insurance.
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• Fiction: An investor's main goal should be to find an investment that is selling cheap, so that the only way it can go is up.
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• Fiction: A credit score is just a number; it won't impact my life very much.
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• Fiction: I don't have to pay taxes on social security benefits.
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