A funny quote I heard Ben Stein quote his father saying was “Figures don’t lie, but liars figure.“  That has stuck with me, especially as I read bureau statistics and corporate reports, all of whom have a tremendous self-interest to “fluff” their statistics to make you and I feel warm, fuzzy, and cozy all over (Click to see how the bureaus or banks report their “figures”).

They publish statistics giving us a false hope of a recovery, but could backfire if we made choices based on those “facts!”  Couldn’t that have a similar consequence for us as it did the failed banks when a subprime borrower would claim they made $10,000/mo. on the mortgage application when they really only made $5000/mo.?  Unfortunately for us, we don’t have the government bailing us out!

I did the same thing when I was a financial adviser. If I wanted to give hope to my client (or to scare them into doing business with me), I would run numbers that were historically accurate, but using average returns, government’s inflation statistics, etc.  I would show potential clients what they “could” have in retirement while offering no promises.  I would even show a conservative inflation statistic of 2-3% (my inflation podcast killed this statistic) to encourage them to save more with me.  By adjusting these numbers, I could show nearly any outcome I wanted!  Do you see my point?

My advice is to NOT make financial choices based on speculation or so-called “official” statistics. Whether you choose to invest in business, real estate, etc, it’s up to you.  In mutual funds (401k’s and IRA’s) and similar paper assets, you have high risk because they are dependent on these statistics.  Why gamble your hard-earned money away?  I recommend you invest where you CAN control your own statistics!