4 Common Personal Finance Mistakes
Sophia Tsoupelis
Associate Advisor Sophia Tsoupelis outlines four common personal finance mistakes that professionals make and steps you can take to avoid them,
1. Failure to plan for retirement
Identifying how much money you need to save for retirement is not an easy task. Often individuals are confused about what investments to make and do not take time to set basic retirement saving goals, resulting in an underdeveloped action plan. Working with a financial advisor can help resolve this problem! Financial planning is much more than just numbers and investments. It’s an iterative process that helps you establish a vision, define your goals, chart your progress, and stay on track. No matter what stage you are in life, working with a trusted team can help you make the right choices around every part of your financial life and beyond.
2. Investing in depreciating assets
Borrowing money to purchase assets like cars, boats and RVs is a common trap professionals can slip into. Nearly all vehicles will depreciate as it is used, and if you have a loan, you may ultimately pay more than the vehicle’s cost through interest. Similar to a vehicle, a house can also be a depreciating (or appreciating) asset. Many professionals purchase homes with the intent of ‘flipping,’ renovating, and selling for profit. Although this may seem appealing instead of renting, individuals need to examine tax, maintenance, repair, and various other hidden expenses.
3. Failing to invest
If you do not invest your money in a way that generates a profit, it will lose value due to inflation. Start by contributing a portion of your earnings to your employer’s retirement plan, such as a 401(k) or 403(b), especially if they match your contributions. You can also open an Individual Retirement Account (IRA), a tax-advantaged investment account used for retirement savings. Investing in mutual funds or Exchange Traded Funds (ETF’s) has traditionally yielded higher returns. Here at Strategic Financial Services, we believe that ETFs are a strong investment vehicle as they yield a strong return and provide diversification.
4. Not monitoring your expenses
Although this may sound more like a reprimand than advice, it is an important part of managing your personal finances. As you advance within your career and your earnings increase, it is important to have a strong understanding of your spending. While you can use a portion of these new earnings to change your lifestyle, you should also concentrate on paying off student loans, saving for a down payment, and investing in retirement accounts. Make sure you pay off consumer debt first, such as credit cards with high-interest rates.
About Strategic
Founded in 1979, Strategic is a leading investment and wealth management firm managing and advising on client assets of over $1.8 billion.
OverviewDisclosures
Strategic Financial Services, Inc. is a SEC-registered investment advisor. The term “registered” does not imply a certain level of skill or training. “Registered” means the company has filed the necessary documentation to maintain registration as an investment advisor with the Securities and Exchange Commission.
The information contained on this site is for informational purposes and should not be considered investment advice or a recommendation of any particular security, strategy or investment product. Every client situation is different. Strategic manages customized portfolios that seek to properly reflect the particular risk and return objectives of each individual client. The discussion of any investments is for illustrative purposes only and there is no assurance that the adviser will make any investments with the same or similar characteristics as any investments presented. The investments identified and described do not represent all of the investments purchased or sold for client accounts. Any representative investments discussed were selected based on a number of factors including recent company news or earnings release. The reader should not assume that an investment identified was or will be profitable. All investments contain risk and may lose value. There is no assurance that any investments identified will remain in client accounts at the time you receive this document.
Some of the material presented is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. Strategic Financial Services believes that such statements, information, and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.
No content on this website is intended to provide tax or legal advice. You are advised to seek advice on these matters from separately retained professionals.
All index returns, unless otherwise noted, are presented as price returns and have been obtained from Bloomberg. Indices are unmanaged and cannot be purchased directly by investors.