Money myths

Rent buys you something real: a place to live, flexibility and no repair bills.

Owning has its own costs that you never get back either – mortgage interest, maintenance, insurance and the one-off costs of buying, such as fees and taxes that depend on your country.

Early in a mortgage, a large share of each payment is interest rather than paying down the loan.

Opinion: the fair comparison is rent against the unrecoverable costs of owning, not rent against the whole mortgage payment, and the answer depends on prices, rates and how long you stay.

Example. On a €200,000 mortgage at 4% a year, the interest in the first year is roughly 200,000 × 0.04 = €8,000. That money does not build ownership, just like rent.

Nobody knows when a fall will come, how deep it will be, or whether prices will first rise well above today's level.

While you wait, your money is not invested, and the months you skip cannot be added back later.

Investing a fixed amount every month removes the need to guess, because you buy at many different prices over time.

Time spent invested matters more than the exact day you begin.

Example. If you wait 12 months for a dip that never comes, you have 12 fewer monthly contributions working for you – and you still face the same question about when to start.

The price of gold can fall, and it can stay below an earlier high for many years.

Gold pays no interest, dividends or rent, so any return comes only from someone later paying a higher price.

Physical gold can also come with costs for storage, insurance and the gap between buying and selling prices.

That does not make gold useless, but "always" is the wrong word for any single asset.

Investing does not require a large lump sum – it is often possible to invest small amounts every month.

What matters most early on is the habit and the time, not the size of the first payment.

Small amounts add up: €3 a day is about €91 a month, or €1,095 a year.

Before you start, check the fees, because a fixed fee on a very small payment can take a large share of it.

Example. €3 a day for 20 years is 3 × 365 × 20 = €21,900 paid in. At an assumed 5% a year, compounded monthly, that grows to roughly €37,500. The 5% is an assumption for the example, not a forecast.

Expensive debt, such as a credit card at a high rate, is usually worth clearing before investing, because few investments reliably earn more than that rate.

Without any savings, one unexpected bill can push you straight back into debt, so a small starter cushion often comes first.

Cheap, long-term debt like a mortgage can run alongside saving and investing; many people would wait decades otherwise.

Opinion: the order that works for most beginners is a small cushion, then expensive debt, then a mix of saving and investing while cheap debt runs its course.

In the EU, deposits are protected by a deposit guarantee scheme up to €100,000 per depositor per bank if the bank fails.

That protects the number in your account, not what it can buy.

When prices rise faster than the interest you earn, the same amount of cash buys less each year.

Cash is the right place for an emergency fund and short-term goals, but over many years it slowly loses value after inflation.

Example. €10,000 earning 0% while prices rise 3% a year buys about as much after 10 years as €7,440 does today (10,000 divided by 1.03 ten times).

Source: Directive 2014/49/EU on deposit guarantee schemes, Article 6(1) – coverage of €100,000 per depositor

Short-term betting on price moves, especially with leverage, can behave a lot like gambling: losses can be fast and larger than you expected.

EU regulators have restricted how some leveraged products, such as CFDs, can be sold to retail investors.

Owning a broad, diversified mix of companies for many years is different, because you own a share of real businesses and their profits.

Opinion: the difference lies less in the market and more in how you use it – leverage, short time frames and high costs push investing towards gambling, while low costs, diversification and patience push it away.

Source: ESMA – Product intervention (restrictions on CFDs and binary options for retail investors, 2018)

A fee is certain: you pay it every year, whatever the fund returns.

Any extra return a more expensive fund might deliver is not certain at all.

Because fees are taken every year, their effect compounds over time just like returns do.

Before choosing a fund, read the "What are the costs?" section of its Key Information Document, which must show the total costs in euros and as a percentage.

Example. €10,000 growing at 6.8% a year for 30 years becomes about €72,000. At 5.5% a year – the same 7% before costs, minus a 1.5% fee instead of 0.2% – it becomes about €49,800. The higher fee costs roughly €22,000 (yearly compounding; the calculator adds growth monthly, so it shows slightly more). The 7% is only an assumption for the example.

Source: PRIIPs Regulation (EU) No 1286/2014 – Key Information Documents

Timing the market means getting two decisions right: when to sell and when to buy back.

Getting one right and the other wrong can leave you worse off than if you had done nothing.

Big rises and big falls can come close together, so stepping out to avoid one can also mean missing the other.

Opinion: for most people, a plan they can stick to – regular amounts, a sensible mix, low costs – is more useful than trying to predict the next move.

The minimum keeps your account in good standing, but it is set low, so most of it can go to interest rather than to the balance.

Interest is charged on whatever balance is left, so a slowly shrinking balance keeps costing you month after month.

Paying even a little more than the minimum can cut both the time and the total interest a lot.

If you have several debts, a clear order of attack helps – see avalanche vs snowball.

Example. A €3,000 balance at 22% a year, paid at €60 a month, takes about 137 months – over 11 years – and costs about €5,200 in interest. Paid off over 36 months instead, the payment is about €115 a month and the interest is about €1,100.

House prices can fall, and they can stay below an earlier peak for years.

Prices depend on interest rates, incomes, local supply and the wider economy, and all of these change.

A home is also a single, large, hard-to-sell asset, often bought with a lot of borrowed money, so a fall hits a buyer harder than the headline percentage suggests.

Buy a home because it suits your life and budget, not because you expect the price to rise.

Example. Buy a €250,000 home with a €25,000 deposit. If the price falls 10%, the home is worth €225,000 – the whole deposit is gone on paper, while the loan is still €225,000.

EU rules require investment firms that show past performance to include a prominent warning that past performance is not a reliable indicator of future results.

A fund or share that did very well over the last few years may have been helped by conditions that will not repeat.

Past figures are still useful for understanding how much an investment has swung up and down.

Use them to judge risk, not to forecast returns.

Source: Commission Delegated Regulation (EU) 2017/565, Article 44(4)(d) – past performance warning