Busting the Interest Rate Lies

“The hard part about telling the truth with numbers often isn’t finding the truth. It’s having the guts to share the truth.”
– Seth Godin

Discover the Whole Truth About Money and How You Can Keep Control of Yours!

Interest rates can be deceiving. Few people understand how they really work, and financial institutions (from financing and mortgage lenders to financial advisors and stock brokers) often take advantage of what we don’t fully understand for their own benefit.

Best-selling author and thought leader Seth Godin recently published a blog post titled, “On average, averages are stupid.” He goes on to explain why he says that averages are “stupid”:

“Across our 100 locations, sales on average are up 3% last month.”

This tells you exactly nothing.

It turns out that ten of the outlets each saw their sales double while most of the other ones are stagnating or even decreasing in sales. That’s the insight.

Averages almost always hide insights instead of exposing them.

Have We Been Misled?

Certainly averages hide insights when it comes to average vs. actual returns of the stock market. 

“Average rates of return” are often touted by financial experts, and yet simple math can show us that Average does not equal Actual.

Pretend that you invested $100,000 into a mutual fund that had promised an average rate of return of 25% if you left the money alone for 2 years. Sounds pretty good, doesn’t it!?

Now, let’s say that it earned 100% in the first year. After the first year, the investment would look like this on a cash flow financial calculator:

Now let’s say that the fund earned -50% (it lost 50%) in the second year. Now your investment looks like this:

While your fund’s average rate of return was 25% (that is mathematically correct, 100 + -50 / 2 = 25%), its actual yield was 0% because you ended up with only the $100,000 you started with. 


As we can see, Average does not equal Actual. Average rates of return are usually misleading, and never to the benefit of the investor. As a matter of fact, average rates or return almost always less than actual rates of return (except when rates never fluctuate, in which case they are the same). The roller coaster ride of the stock market can make it seem like accounts are doing better than they are, but when interest rates are calculated correctly, the results are often very disappointing. 

There are other aspects of interest rates that aren’t what they seem, either.

For instance, mortgages. Everyone assumes that a 15-year mortgage is the way to go, if you can afford it. After all, you’ll “save” all kinds of interest, won’t you?

On the surface, it seems so. But here’s the problem: when you compare a 15-year mortgage with a 30-year mortgage, you’ve got to do so over a 30-year time period. And you have to consider the whole picture that each mortgage would have on your finances. 

Remember the 7 Principles of Prosperity? Principle #2 asks us to SEE the whole picture of our personal economy. And Principle #3 asks us to MEASURE opportunity costs. And when we do those two things… the answer may surprise you!

You see, a 15-year mortgage will lower your interest payment… but it won’t lower your interest COST. You will either “pay up interest, or pass up interest.” With a 15-year mortgage, you’ll pay less interest to the lender than with a 30-year mortgage, and you’ll pass up interest that you could have earned by saving or investing the difference!

Now, if you’re the kind of person that is more likely to spend the difference than save it, a 15-year mortgage could be a better choice. But what if you could earn interest on the difference?

If you could put that money in a side account and earn even just the same modest interest rate as you’re paying on your mortgage, you would actually come out ahead! To understand this though, we have to consider the mortgage interest tax deduction as well as opportunity cost, and we have to compare both mortgages (a 15-year mortgage vs. a 30-year mortgage with a side account for saving/investing) over a 30 year period.

Most people try to compare 15-year mortgages over 15 years with 30-year mortgages over 30 years, but that is not a valid comparison. We have to compare both of them over the same time-frame in order to have a correct mathematical comparison. (We make the comparison in the book, complete with Truth Concepts software screenshots so you can see for yourself!)

To better understand interest rates and the impact they have on our finances, we highly recommend reading Busting the Interest Rate Lies, our new book! I wrote this book with expert help from Mona Kuljurgis and others, and I also relied heavily on Truth Concepts calculators, developed by my husband Todd Langford. Busting the Interest Rate Lies is now available on Amazon.com! You can order the paperback right now, and it is available as a Kindle ebook and now Audiobook as well.

Busting the Interest Rate Lies fills in important gaps about essential but little-understood financial topics you won’t hear about from most financial advisors. It corrects common financial myths such as:

Busting the Interest Rate Lies

Busting the Interest Rate Lies follows “Gary,” a central character, from high school through middle age as he encounters many decisions and issues related to his personal finances. Journey along with Gary and learn many rarely-discussed facts about:

Whether you are just learning to manage your money or whether you are an experienced investor, Busting the Interest Rate Lies offers information to help you avoid common financial  pitfalls and put MANY thousands of dollars into your pocket!

Other Books and Resources from Kim Butler:

Busting the Retirement Lies
Busting the Retirement Lies
Busting the Retirement Lies

Living with Passion, Purpose and Abundance Throughout Our Lives


In this ground-breaking book with rave reviews, Kim Butler tackles not only the financial lies of retirement, but she also looks at retirement itself as a “lie” that must be replaced by a new possibilities and assumptions. This book gives inspiring examples of those who are re-thinking retirement and putting their passions to use in creating lifelong prosperity. It also crunches some serious numbers to show why 401(k)s are overrated as an effective way to save for retirement!

Busting the Financial Planning Lies
Busting the Financial Planning Lies

Learn to Use Prosperity Economics to Build Sustainable Wealth 

In this book, Kim Butler spells out the difference between “typical” financial planning and Prosperity Economics, comparing how the wealthy act and invest with the investment advice given to us from our financial institutions. The book also articulates the 7 Principles of Prosperity that can guide us in making better financial decisions. 

Busting the Financial Planning Lies
Live Your Life Insurance
Live Your Life Insurance
Live Your Life Insurance

Surprising Strategies to Build Lifelong Prosperity with Your Whole Life Policy

Revised and expanded in 2016, this little life insurance book is a best-selling reference book for advisors and investors alike. With many quick, powerful examples of how to make the most of a whole life policy, Kim Butler shows us why life insurance isn’t just for the beneficiaries – it is designed to be used throughout our entire lives!

Live Your Life Insurance is also available in a Canadian edition.

Would you like to have Kim’s personal help on your finances?

to schedule an appointment. Kim and her team are here to help! 



Kim Butler is the award-winning Founder of Prosperity Thinkers

Kim D. H. Butler is a thought leader in the financial industry.

  • Founder of the Prosperity Economics Movement
  • Recognized as an “Investopedia 100” top influential advisor
  • Author of seven ground-breaking financial books, including the Amazon best-sellers, Live Your Life Insurance, and Perpetual Wealth

Begin your journey with the Prosperity Action Pack

Get immediate access to our short ebook Your Guide to Activating Prosperity, audio recording, our summary sheet about the 7 Principles of Prosperity™, and our subscriber-only Prosperity on Purpose Round-Up. 

Just fill out this form and get access now!