First Person: The 4 Pieces of Financial Advice I Hate to Hear

Financial advice is an often an integral part of our lives, and heaven knows there's enough of it out there to go around. While I think that people need to explore various opinions and ideas related to investing and personal finance, sometimes I hear particular financial advice that just makes me cringe. And while the following four pieces of financial advice might not be detrimental to everyone, I personally don't like them. Let me tell you why.

"You're Young; You Have Time to Recover Losses"

To me, this little piece of advice is pretty much like giving younger people the go ahead to put their money in high risk situations. It's like an excuse to accept financial loss and failure. While in many cases it does apply to people who may have decades in front of them to recover money from poor investment decisions or mistakes, I just don't like thinking of people investing their hard earned money in this way. It's like giving big finance the go ahead to take risks with other people's money and then explain it away in this manner when angry investors confront them about it.

"It's Never Too Late to Start Saving"

In my opinion, this type of reasoning can backfire. I know what people are saying when they quote this type of advice, trying to give people that are behind in their personal finances and savings the motivation to start, even if they have lagged severely. But for some, it might be the wrong type of logic, instead sending the message that they can go ahead and put saving off just a little bit longer because there is always tomorrow.

Well, FYI, there isn't always tomorrow, so you'd better think about starting to save today.

"You Need $500 in an Emergency Fund"

If you have luck like I do, bad things don't travel alone. And if you only have $500 as an emergency fund, you might find that your fund evaporates quickly when times get tough. Shoot me an email when you get laid off or fired and you're expected to supplement your unemployment or just make due with that massive $500 emergency fund you've laid away and let me know how that works out.

Sure, $500 is a start, but in many scenarios it could leave you high and dry when a real emergency hits. Everyone has to start somewhere, and I realize that many people aren't the best savers, but I would strongly urge people to sock away a bit more than $500 if they truly want to call it an "emergency" fund.

"Contribute as Much as You Can Into Your Tax-deferred Retirement Fund"

Why is this common advice? Why do we hear so many advisors urging people to contribute as much as they can to a tax-deferred retirement fund? Is it because it's about the only retirement option out there for the average person now that the real estate market went bust, pensions are underfunded and social security is shaky? Is it because it will bolster stocks and keep Wall Street running? Or is it because it is pre-tax (at least until you retire, then the government can have their share) and your employer may match a certain amount of your contributions so that when the market hits another well-placed bubble, you lose your money and your employer match?

I think bubbles are going to become the norm. Actually I think they already are. And with the proliferation of technology and the availability of worldwide information in seconds, I feel that stock markets are going to become increasingly volatile -- if they aren't already. If this is the case, a market-based retirement account is NOT where I would be sticking my hard-earned money. The problem is that there are very few other options in which the average person can invest his money and expect to have any shot of earning a reasonable return. Still, I'd rather earn a safe percent or two in a certificate of deposit and lose it to inflation, than have my profits sucked away by greedy investors and huge market drops.

At the low point of the financial crisis, I calculated that my retirement account had lost every penny of profit and employer paid contribution that I had received over a period of seven years and was starting to eat into my own contributions. Seven years of contributions gone in less than a year. Just recently did I get back to where I was (almost two years later). It just goes to show how quickly one bubble can negate a long period of investment growth very quickly and how long it can take to get back even again. And while the market has come back, with talk of inflation starting up and a new global issue that affects the markets seeming to spring up almost daily, the last thing I'm going to do with my money right now is give it to overpaid brokers and bankers to play with.

More From This Contributor:
Money Saving Habits: The Good, the Bad and the Ugly
5 Way to Save 5 Bucks in 5 Minutes or Less
How I Hope to Further My Financial Position in 2011

Disclaimer: The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute legal or financial advice. For financial advice, readers should consult a licensed financial advisor. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.