We've been brainwashed: Financial truths or just good marketing?

There are certain 'truths' out there in the finance and insurance world that most of us take for granted. Can you think of some? Come on, class, let's do this together!

How about this one: "It is better to own than to rent." Heard that one before?
What about, "buy term and invest the difference?" Familiar?
"an index fund is better than any other type of fund." or "No load funds are always better than load funds." or "annuities are bad." or "fixed rate is better than variable rate loans."

The list goes on and on. Each industry has their own phrases that are heard and repeated over and over again. In real estate you see this in the ads "Start paying yourself!" In life insurance, "Buy term and invest the difference." and many many more.

Do we ever stop and ask ourselves why? Where do these phrases come from? More importantly, how can we know they're true?

The savvy investor knows he can not take any advice simply at face value - there's always a trade off between different products and services. Logically, then, the trade offs might be appropriate for certain people and totally inappropriate for others.

In other words - we don't all need to be home owners.

For one person, a home with a 30 year fixed rate mortgage, term life insurance, low deductible health insurance, and a 401k might be appropriate; however, for another person with his or her own unique personality and goals might feel that in the same situation he would want a rental, a ROTH IRA, permanent life insurance, a high deductible health plan and an HSA.

Both of these are great situations to be in! Neither is wrong! The second fellow is only breaking all the rules because the sales folk are telling him what they want the rules to be. Were it not for "they" there would be no "wrong" way.

Where do these phrases come from then? From marketing and sales professionals. Does that make them wrong? not necessarily, but neither does it make them right. It just makes them sales persons.

The next time you hear a pitch or have a financial decision to make, look for the reasons why behind the recommendations. Consider the alternatives. Your professional ought to be able to show and teach you what all your options are, then tell you why option B is most well suited to you and your specific needs. Obviously, then, if you are a professional, you owe it to your clients to present them with all their options, then your recommendation and reasons why. They will trust you more that way - and rightfully so.