Thursday, February 5, 2009

Failed Financial Beliefs and Time Tested Truths: Post 4

This is the fourth and last post in a series that reviews retirement planning beliefs that have been shattered by a failing economy. Check out Post 1, Post 2 or Post 3 in the series, What to Do When the Financial Experts Don’t Know Anything, which discusses financial risk and guarantees.

Failed Belief No. 4: Buying a home is always a good idea.
The belief that it is always a good idea to buy a home led millions of American families to buy homes using whatever mortgage they could afford. Now, in the face of a recession and dropping real estate values, these families are at best, stuck in their homes due to having less equity than the market value, and at worst facing foreclosure. No matter how you look at it, their decision to buy a more expensive home than they could really afford was a big financial mistake.

Time-Tested Truth No. 4: Control the risks that you can control.
Financial advisors can really help a client by performing a risk audit. Take a look at the risks your client faces, help him to examine those risks, and help him to purchase affordable insurance to mitigate those risks. Every family should have homeowners, automobile, health, and life insurance. Many families should also have disability, personal umbrella liability, and long term care insurance. Too many families are inadequately protected.

This ends our four post series on failed beliefs of the experts and time tested truths are coming back in fashion. It’s a risky world. Financial professionals who value guarantees and insurance products can help their clients live comfortably. That puts everyone on solid ground.

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