Mistakes happen in life, and our finances are not immune. All too often we hear people worrying about whether they have enough saved or if their investments are where they should be. Working with a financial advisor is one way to stay on top of your finances. Let’s take a look at three common mistakes you want to avoid.

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1. Not Having Enough in Your Retirement Account

One of the biggest mistakes people make is not saving enough in their retirement accounts. In fact, in the aftermath of COVID-19, 27% of Americans have decreased or stopped retirement contributions altogether, and another 21% dipped into their retirement fund.^[1]

Whether you’re just starting out, trying to compensate for withdrawals, or just trying to have more in your retirement fund, you might want to look into maxing out your contributions. If you’re currently contributing 10%, try increasing that to 12-15%. Also, try to avoid taking early withdrawals as this can put a huge dent in your savings.

If you’re already maxing out your 401(k) contribution, consider opening up an IRA. Traditional or Roth IRAs are limited to $6,000 in 2022, although this may increase for 2023, and those who are 50 and older can make an additional $1,000 catch-up contribution.^[2]

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Entrepreneurs and Business Owners

Self-employed individuals or business owners might look into a SEP-IRA, also known as a Simplified Employee Pension, which is similar to a traditional IRA where you can make contributions on your own behalf for your retirement. You can contribute 25% of your self-employed income or $61,000 for the year 2022 (whichever is greater).^[3]

Another option for entrepreneurs or business owners is a solo 401(k), similar to a traditional 401(k) you’d contribute to as an employee. Funds invested within a solo 401(k) plan grow on a tax-deferred basis.

2. Making Ill-Advised Investments

Taking a lump sum of money and putting it all into one money-making scheme might result in disappointment if that investment doesn’t pan out. Instead, consider automated contributions, which means that you will be buying more stocks and building a more diversified portfolio no matter what the market does.^[4]

Another common mistake is simply investing in the wrong products (for instance, investing in bonds when you’re expecting growth, or investing in stocks and expecting safety). There are certain risks/rewards associated with some types of investments, and it takes a qualified professional to determine your risk tolerance and recommend beneficial and appropriate strategies.

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3. Working Without a Financial Plan

Employers might ask in an interview, “Where do you see yourself in 5 years? 10 years?” Well, you should be asking the same about your finances. Where do you want to be financially? How do you get there?

If you are saving without a written financial plan, you could be setting yourself up to fail. It’s like grocery shopping without a list: you’re bound to leave something out. If you have an actionable financial plan that holds you accountable, you are less likely to forget to save for college, save extra for retirement, or diversify your investments. And by working with a professional who can track your progress and deliver real-time reports, you’ll be able to measure your growth.

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Get Started Today

At Coign Capital Advisors, the underlying theme of all our services is for you to attain a “Coign of Vantage,” or advantageous position, by executing on a best-of-strategies philosophy. Unlike other firms, we seek a holistic understanding of your financial resources, goals, and risk tolerance before implementing the investment strategy to accomplish your lifestyle goals and objectives.

Schedule a meeting today to get started. Send us an email at info@coigncapital.com or call 801-676-4582.

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About Coign Capital Advisors

Coign Capital Advisors is a fee-based investment advisory firm based in Draper, Utah. Specializing in serving retirees, business owners, and entrepreneurs, the firm provides holistic wealth management that goes far beyond investment consulting and strives to attain suitable performance combined with solutions that make clients’ financial goals achievable. Led by J. Matthew Zundel, Robert P. Welch, Adam G. Lefler, Daniel R. Zundel and Courtland Adams clients receive a high level of service from a team with more than 100 years of combined experience. To learn more, visit www.coigncapital.com.

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^[1] https://finance.yahoo.com/news/14-surprising-retirement-facts-stats-191300779.html

^[2] https://www.experian.com/blogs/ask-experian/401k-ira-contribution-limits/

^[3]https://www.irs.gov/retirement-plans/plan-participant-employee/sep-contribution-limits-including-grandfathered-sarseps#:~:text=%2461%2C000%20for%202022%20(%2458%2C000%20for%202021%20and%20%2457%2C000%20for%202020)

^[4] https://www.nextgen-wealth.com/blog/ten-ways-avoid-bad-investments

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