Sourced from WSJ | Dec 28, 2021
Here are some things that financial advisers suggest avoiding in 2022
When it comes to money, sometimes, the best thing to do is nothing.
Financial to-do lists during this time of year are that it’s always smart to check on the rules around charitable giving or setting financial goals for the new year. Knowing what to skip is just as important, though it is important to consider this list of suggestions from professionals as a 2022 To-Don't list.
Don't rush off to pay off a low-interest mortgage
With inflation predicted to rise, paying off a fixed mortgage debt ahead of schedule doesn't make sense.
Instead, try putting the extra money in investments that will perform better than the rate cost of the mortgage. This holds true for those who have recently refinanced a mortgage.
Rather than make an extra $10,000 payment on your 3% mortgage, you could buy a new series US I savings bond where the money will earn an annualized 7.12% rate through April 2022. The bonds can't be redeemed for 12 months from the purchase date. Consider investing them in a long-term portfolio with low fees. Your after-tax returns are likely to be greater than the interest cost of the mortgage.
Don't overpay for items because 'supplies are limited'
Consumers usually wait for a sale or at least shop around to try and get the best price. Now many retailers are putting language on their websites such as "only a few left" to push shoppers to click the "buy" button amid the supply chain shortage. Don't succumb to the pressure. Some items may genuinely be in short supply but panic buying or snagging something "just in case" it's out of stick later can undermine a budget. Rising prices are real but that doesn't mean you shouldn't shop around for the best price.
Don't track your spending
Tracking every last dollar of your monthly spending can feel empowering at first but hard to sustain in the long run. It might drive you crazy. Instead, focus on a much simpler approach such as designating 50% of your paycheck for essentials such as rent, 20% for savings, and 30% for everything else. Save first so there's no need to budget for what's left.
By figuring out how much you want to save every month, setting that amount aside like setting some aside on automatic transfer to high-yield online savings account for example. When you put your long-term goals first, tracking your short-term spending matters much less.
Don't fall prey to FOMO
You may feel a pang of jealousy for not owning cryptocurrencies or having the latest stock sparking conversations, but don't feel like you need to chine in. It may feel like a wise choice to get in now, but chasing trends often leads to underperformance in your returns as their outperformance won't last forever.
It's fun to stick with a time-tested investment strategy such as a low-cost or well-diversified investment portfolio.
It's a waste of time to dive into investing trends like NFTs, SPACs, and crypto if you know they aren't a fit for your investing goals or simply if you don't understand them.
