We have a cliché problem in personal finance. Too many empty phrases that get repeated endlessly because they suggest expertise and mastery of money. You’ll find some prime examples of stale personal finance clichés in a recent blog post by money coach Anita Bruinsma. Under the headline “Personal finance hogwash,” Ms. Bruinsma takes on real estate investing, passive income, side hustles and more. I liked her post so much I invited her to expand on it in a Q&A. Here’s our exchange by e-mail:

Q: Anita, can you tell us a little about your background in investing and the type of work you do?

A: I spent 15 years as a stock market analyst, researching companies and making stock recommendations for the mutual funds that my group was managing. Now I’m a financial coach and one of my service offerings is teaching people how to become do-it-yourself investors. On the personal side, I’ve been a DIY investor since the age of 23.

Q: What prompted you to single out those five phrases as hogwash? I mean, lots of people really believe some of this stuff.

A: I think that personal finance and investing have become hobbies for some people, and this has led to a lot of information being presented online by people who are far from being experts in the field. There are phrases and ideas that just keep being repeated over and over again as if they are unquestionably correct. The rhetoric can make it seem like people are getting rich by doing these remarkable things while everyone else is missing out. This can feel daunting and can lead people to throw their hands in the air and give up on doing anything at all about their finances because it’s too difficult or complicated. Of course, it doesn’t have to be this way.

Q: I cannot believe how often I’ve heard the phrase “investment property” in the past couple of years, both professionally and in conversations with friends and family. You’ve taken aim at the idea that investing in real estate is the best way to get rich. Why?

A: There’s a sense of FOMO if someone doesn’t own real estate in this country. The truth is that owning real estate as an investment requires work and can be stressful. It’s easy to say, ‘my tenant’s rent pays my mortgage,’ but what about the new fridge they need in their unit or the broken air conditioner? What about taxes, insurance and upkeep? Then there’s the hassle factor: difficult tenants, recordkeeping, and the call you get from a tenant about a plumbing emergency while you’re away on vacation. It’s not unusual for people to run a loss on their rental property on an annual basis once all costs are taken into consideration. That means their cash flow is reduced, leaving less money available for their everyday lives.

Q: What about trading stocks or crypto – what’s your sense of how feasible it is to trade your way to building wealth? God knows, the personal finance universe is full of people who say it is.

A: If you want to see me get fired up at a dinner party, invite someone who loves to talk about trading crypto and stocks. People who brag about how much money they made trading stocks and crypto usually aren’t telling the whole story. Winning in trading on a consistent basis is rare – so rare that even the most experienced Bay Street money manager can’t do it. Why would someone with no experience and training in stock market analysis, and who has no support from a team of people, think they can do better? The thought of trading stocks makes a lot of people feel like investing isn’t possible for them because they don’t have the time or inclination. The truth is that anyone can invest in the stock market with a buy and hold strategy using exchange-traded funds or mutual funds.

Q: You also took aim at the side hustle, a phrase has always bugged me because it suggests the reason you’re not getting ahead financially is that you’re not working enough. Yet in today’s economy, I wonder if some people might need a side hustle to get by. What are your thoughts?

A: There’s no question that the high inflation we’ve experienced recently has made it harder to get by. However, we have to be careful when looking at aggregate data and averages when determining how well people are “getting by.” Every person’s situation is unique. Some people are definitely struggling to pay their bills and in some cases they simply need to earn more. For many people though there are other ways to get by – sometimes it’s a question of the choices they are making, especially with respect to how they spend their money. If someone wants to take on a side hustle that’s great. But for a lot of people, it’s simply not possible. What would the ‘hustle’ be? Would they have any downtime at all? Will they give up time with their family? I’d like people to stop feeling guilty for not taking on an additional job disguised as a side hustle.

Q: The hogwash phrases you picked all have a common theme – that there are shortcuts or proven formulas for getting rich. In your experience, what does it take to build wealth, and how long a timeline should you have?

A: Building wealth is based on the simplest of concepts: Spend less than you earn, save, and invest. Yes, it’s boring, it’s tedious, and it takes time. But for average people, this is how wealth is built. When I say “wealth,” I don’t mean accumulating money to hoard it. I primarily mean accumulating enough money to pay for your retirement so that you don’t have to stress about it.

The Globe and Mail, October 19, 2023