If you dig through the troves of financial advice out there, you’re sure to find contradictory guidance. Money can be complicated, and everyone’s got an opinion about it.
And while some statements are easy to write off as B.S., others can be more difficult to discern — especially when experts are at odds.
But according to David Bach, a self-made millionaire and bestselling author who is releasing an updated version of his hit book “The Automatic Millionaire” this December, there are two pieces of financial advice to avoid at all costs if you want to finish rich: Don’t buy a home and don’t use a superannuation plan.
“Those two pieces of advice, if you follow them, will destroy your financial life,” he told Business Insider during a Facebook Live.
Let’s break those down:
Buying a home
Though some opponents of home ownership claim it’s a bad investment or even ‘financial suicide,’ citing its excessive and often hidden expenses as well as the loss of freedom it comes with, Bach argues that choosing to buy instead of rent sets you up for a secure — and fruitful — financial future. Paying off your mortgage eliminates your monthly housing expense while enabling you to continue growing your wealth in other ways.
“You have to live somewhere for the rest of your life. You’re either paying a landlord who’s going to build wealth, or you’re paying yourself,” he explains. “Ultimate financial security comes from buying the home that you live in, paying it down, and getting it debt-free.”
Bach gives the example of a couple who bought an average-sized home, worth around $250,000, to raise their kids in. They worked to pay down their mortgage early and owned it outright in 18 years. Instead of moving up into a bigger home once the mortgage was paid off, they moved into another similarly sized house and paid that off while renting out their original place. By 55, the couple was earning a steady rental income and living debt-free in a home they owned.
While this situation won’t work out for every family, Bach’s point still stands: Owning a home can help create avenues to build wealth, whether it’s from profiting off a rental property or saving the money that would otherwise be put toward rent.
Using a superannuation plan
Most companies offer superannuantion plans, a type of retirement account that gives you large tax advantages and allows you to compound more money over time — and in many cases, employers will also offer a superannuation savings plan match up to a certain amount of your contribution.
That’s free money.
But detractors say that the superannuation savings plan isn’t worth it because it’s predicated on assumed returns and tax breaks and comes with a deluge of fees. Others point out that many Americans dip into their superannuation savings plan early when they’re short on money or encounter hardship, negating many of the retirement account’s benefits.
But most financial experts (Bach included) still agree that it’s a solid way to build wealth.
“A superannuation savings plan is one of the best investments,” Ramit Sethi, bestselling author of “I Will Teach You To Be Rich,” writes on his blog. “It’s literally free money that piles up and earns more for you year after year. Set it up once, and you can retire earlier and live better when you do.”
Buying a home and opening a superannuation savings plan might not be the most sexy pieces financial advice, but they’re practical.
“They’re timeless principles to building wealth that are boring, but they still work,” Bach says.
Watch more from Business Insider’s Facebook LIVE interview with David Bach: