Financial health is an extremely important factor in achieving financial success and stability over the long term. Unfortunately, far too many people make mistakes that can have a lasting and serious impact on their overall financial well-being. Read the following 5 common financial mistakes I see in order to mitigate your risk while keeping your financial plan strong and successful.

1. Trying to “Beat the Market”

We all invest with the hope that one day we won’t have to work and will have enough money to live off our investments. Many people wonder: Can a regular investor really beat the market? While some of us have the tools and connections required to make knowledgeable decisions that could lead to a portfolio with higher returns, it’s others, like stockbrokers, bankers, and big corporations, that likely have the advantage. This is because they possess the necessary financial statement analysis skills to develop a greater insight about a given company. The truth is, the average individual investor has little chance of beating the market. A trusted financial partner can provide knowledge to help you make financial decisions that don’t risk harm to your portfolio.

2. Not Planning for Unexpected Risks

Very few people, if any, predicted COVID-19 or the Great Recession. But these two events have made it abundantly clear that unexpected economic downturns must be considered when building a comprehensive wealth management strategy. People often think that an emergency fund is enough to ride out unforeseen major life events, but it usually takes more than that. At Rosemeyer Management Group, we believe that proper risk management is key to staying afloat during uncertain times. This can be accomplished by considering unexpected risks that are personal in nature, such as divorce, disability, accidents, and illness, and by making sure you are properly covered.

3. Not Understanding Diversification

When it comes to investing, asset allocation is the equivalent of deciding how many of your eggs you’re going to put into how many different baskets—or asset classes. Diversification is the spreading of your investments both among and within different asset classes. Your asset allocation will depend on a number of factors, including your risk tolerance and investment horizon. Diversifying your portfolio can reduce the risk of major losses that may result from over-emphasizing a single asset class. Stocks and bonds, for instance, often move in different directions from each other, which is why holding both of these asset classes (and others) can help manage risk. By understanding the role different asset classes play in your portfolio, you can increase the probability that some of your investments will provide satisfactory returns, even if others are flat or losing value.

4. Paying More in Taxes Than Necessary

Of course, we all need to do our civic duty and pay our dues to Uncle Sam. But it’s important to know that there are ways to reduce some—or all—of your tax bill legally. The IRS offers Americans a variety of tax credits and deductions that can legally reduce how much you’ll owe. If you want to save money, consulting with a financial professional or tax advisor can help you create an efficient tax strategy while reducing your tax bill without getting in trouble for tax fraud. It’s important to know what deductions and credits you may be eligible for; and not knowing may result in you leaving money on the table.

5. Not Reaching Out for Help

Let us be the first to commend you for taking the time to learn and understand how to avoid costly mistakes in your financial plan. At Rosemeyer Management Group, we understand that it can be difficult to find the time to stay up to date on the many options for managing your finances. That’s why we offer a personalized financial plan that takes into account your individual values, goals, money mindset, and risk tolerance. We aim to keep you in the driver’s seat of your finances and support you in making changes as you see fit. 

To get started, take advantage of our free introductory appointment online or by calling us at 608-348-2274. For any questions, feel free to reach out to me at payton@rosemeyermg.com. We look forward to helping you find greater financial success!

About Payton

Payton Simon is an investment advisor representative at Rosemeyer Management Group, an SEC Registered Investment Advisor based in Platteville, WI. Payton spends his days providing in-depth investment analysis and aiding in the development of customized, comprehensive retirement, tax, and estate planning strategies to help his clients reach their retirement goals. Payton is passionate about doing his best for every client he serves and making sure they don’t have any blind spots or missed opportunities in their financial plan. He strives to do his part to close the financial literacy gap so people can feel confident and empowered about their financial future. Payton has a bachelor’s degree in finance with a minor in accounting from the University of Wisconsin-LaCrosse. Outside of work, Payton is active in his local Catholic parish and incorporates his faith into every aspect of his life. He loves spending time with his family and friends and is a sports enthusiast, playing golf, basketball, and baseball. To learn more about Payton, connect with him on LinkedIn.