The Worst Financial Advice on the Internet You Should Ignore

Have you ever encountered financial advice that sounds too good to be true? For example, you might hear about making 100% daily returns in crypto or avoiding a 401(k) because it’s a “scam.” The internet is full of misleading financial tips. Unfortunately, many people follow them, which hurts their financial future.

To help you avoid costly mistakes, let’s break down some of the worst financial advice online. More importantly, let’s talk about why you should ignore it.

1. Buy the Most Expensive House You Can Afford

Many people believe that real estate is always a great investment. They assume that because home prices usually increase, buying a house is a guaranteed win. But the reality is different.

The value of your home may go up, but so do your costs. Mortgage interest, property taxes, maintenance, and realtor fees add up. These costs lower your actual return.
Banks approve you for large mortgage amounts. That doesn’t mean you should take the maximum amount. A huge mortgage can eat up over 40% of your income.
When so much of your money goes to housing, it leaves little room for savings, investing, or unexpected expenses.

Better approach: Keep your housing expenses below 35% of your income. Tax planning by a financial advisor can help you balance homeownership with other financial goals.

2. Carrying a Credit Card Balance Improves Your Credit Score

Many people believe that keeping a balance on their credit cards helps their credit score. This is a dangerous myth.

Credit bureaus do not reward you for carrying a balance. They look at your payment history, credit utilization, and other factors.
Carrying a balance leads to high-interest charges. Over time, this can cost you thousands of dollars.
A financial support service can help you use credit wisely and avoid unnecessary debt.

Better approach: Use your credit card regularly, but pay off the full statement balance every month.

3. “Higher Risk Means Higher Returns, So Go for the Riskiest Investments”

Risk and return are related. But that does not mean the riskiest investments always bring the highest rewards.

Some investments, like new cryptocurrencies or penny stocks, are extremely volatile. Many of them lose all their value.
A smart investment strategy balances risk and reward. Chasing the next big thing is gambling, not investing.
Tax planning by a financial advisor can help you build a portfolio that maximizes returns without unnecessary risk.

Better approach: Diversify your investments. Choose assets with strong fundamentals rather than putting all your money into risky bets.

4. Avoid 401(k) Plans Because You Can’t Access the Money Until Retirement

Some people believe investing in a taxable brokerage account is better than using a 401(k). They argue that 401(k) money is “locked up.” This thinking is flawed.

Many employers offer a 401(k) match. That’s free money.
401(k) contributions are tax-deferred. This allows your money to compound faster over time.
If you need the funds early, some 401(k) plans allow loans or withdrawals (with penalties).

Better approach: Always contribute enough to get the full employer match. Tax planning by a financial advisor can help you maximize your retirement savings.

5. Everyone Should Buy Permanent Life Insurance

Life insurance is important. But permanent life insurance is not for everyone.

Permanent life insurance is much more expensive than term life insurance, and its returns are usually lower than those of other investment options.
Many people buy these policies without understanding the costs. A financial support service can help you decide if it’s right for you.

Better approach: If you need life insurance, consider a term policy. It provides coverage at a much lower cost.

6. Invest Your Emergency Fund to Avoid Losing Value Over Time

Investing is essential for building wealth. But your emergency fund should be safe and easy to access.

An emergency fund exists to cover unexpected expenses. You may need it for job loss, medical bills, or car repairs.
If your emergency fund is invested and the market crashes, you could lose money. Selling at a loss may leave you without enough cash when you need it.
A financial support service can help you balance savings and investments for financial security.

Better approach: Keep your emergency fund in a high-yield savings account. This keeps it safe and accessible.

7. Don’t Make More Money Because It’ll Push You Into a Higher Tax Bracket

This is one of the most common tax myths. Many people believe that earning more will leave them with less money after taxes. That’s not how taxes work.

Taxes are marginal. Only the additional dollars in a higher bracket are taxed at that rate.
Your take-home pay will always increase when you earn more.
Tax planning by a financial advisor can help you minimize your tax burden and maximize your income.

Better approach: Never avoid making more money. Instead, focus on tax-efficient strategies to keep more of what you earn.

Final Thoughts

The internet is full of bad financial advice. Some of it sounds convincing, but following it can hurt your financial future. Instead of trusting unverified tips, seek guidance from a professional.

For expert financial support, Frank Kapitza & Associates offers a trusted financial support service to help you make smarter money decisions. Schedule a consultation today to secure your financial future.