Three popular money rules that you should rethink
This article was originally published in The Times on 8 October 2026 in which Charlotte Ransom challenges three common financial assumptions: that you need a trust to pass on wealth, should automatically de-risk at retirement, and must pay off debt as quickly as possible.
Does it really make sense to pay off your mortgage early or be more cautious in retirement? You may find that, sometimes, it pays to ignore the advice.
If I had to highlight three myths that come up time and again in financial planning, they would be: I need to set up a trust to pass on wealth; I should de-risk when I retire; and I must pay off debt as quickly as possible.
All three may be right but can just as equally be wrong. The problem often comes from starting with the answer before asking the question.
Financial rules of thumb are appealing because they simplify what may appear to be complicated decisions, but good financial planning works the other way around. First, ask yourself what you are aiming to achieve, then consider the choices, consequences and trade-offs. Only then should you choose the solution.
Why set up a trust?
Take trusts, for example. When families start thinking seriously about inheritance tax planning and transferring wealth, an increasingly common topic, trusts are often suggested as the solution. But a trust is a tool, not a strategy.
The better starting point is to ask what you want to achieve. Is the priority to reduce a potential inheritance tax liability no matter what? To pass on money as quickly and efficiently as possible? To maintain control over your assets? Or is it perhaps to set clear parameters about how wealth is used by future generations? Depending on the objective, the answer may be very different.
Prioritising control is likely to need a different approach from prioritising the most cost-effective and frictionless way to transfer wealth. Sometimes a trust will be right, while often there will be a simpler way to achieve the desired outcome.
Why take less risk in retirement?
There are those who believe that retirement must be the moment to de-risk. “I can no longer afford to lose money” is an entirely understandable sentiment but retirement does not immediately turn a long-term investor into a shorter-term one.
Your assets may still have to support you for decades. Moving to predominantly fixed income investment and reducing exposure to stocks and shares should be considered alongside the need to drive high enough investment returns to cover your retirement over a long period.
Seeing investments fall, even temporarily, is not comfortable but it is not the same as a permanent loss of capital. The risk of becoming so cautious that your money fails to support your spending is just as relevant. Once you fall behind, it becomes harder to catch up.
Behavioural traits also play a part. Moving out of markets because you are cautious creates a second problem: deciding when to get back in. Market recoveries often get going far before investor confidence returns, so rather than formulaically removing any exposure to potential market gyrations, choose a strategy appropriate to your circumstances, one that you can live with when markets inevitably retreat but which still allows you to beat inflation over time.
Why pay off all debt?
A third deeply embedded rule is to pay off any debts as quickly as possible. In many cases this is the right move, particularly for any loans that are subject to extortionate interest rates.
Repaying larger debts, such as a mortgage, offers peace of mind and, for many, repayment will again be the right choice. But first consider the trade-off. Every pound used to repay a mortgage cannot be contributed to a pension, invested through an Isa or retained to be used elsewhere.
In times of low mortgage rates it has made more sense to keep borrowing against your home and invest any spare funds in Isas or pensions where returns are tax-free. Instead of automatically repaying the mortgage, it’s worth assessing the best use of that money, taking into account your ability and willingness to take investment risk.
Personal finance is full of decisions where there is no universally correct answer. Trusts sound sophisticated. De-risking sounds prudent. Being mortgage-free sounds responsible. Each may be right, but not in all cases and not for all investors.
To best achieve your goals, start with the desired outcome, understand the inevitable trade-offs and review them alongside your broad circumstances and needs.
This article is for informational purposes only and does not constitute financial advice. This is the opinion of Charlotte Ransom as of 8 October 2026 and if you are unsure as to whether disinvesting or investing is suitable for you, please seek advice.