The 5 Biggest Financial Mistakes I See People Make

By Nicola Cyr, CFP®, EA

As a fee-only financial advisor at CGN Advisors, I’ve had the privilege of working with countless individuals and families, many of whom have diligently built substantial assets. However, I’ve also observed common financial mistakes that, if unaddressed, can hinder even the most well-intentioned financial plans.

My goal today isn’t to instill fear, but to empower you with awareness. Let’s take a look at five of the biggest financial mistakes I consistently see, and how we can work together to avoid them.

1. Not Understanding True Diversification

Many investors believe they are diversified simply because they own a mutual fund or an ETF. However, true diversification means spreading your investments across:

• Different asset classes: Stocks, bonds, real estate, commodities, alternative investments
• Various geographies: Domestic, international, emerging markets
• Diverse industries: Technology, healthcare, finance, consumer staples, etc.
• Different company sizes: Large-cap, mid-cap, small-cap
• Investment styles: Growth, value

The mistake I often see is over-concentration. Perhaps a client has too much in their employer’s stock, or a significant portion tied up in a single sector they feel familiar with. 

While concentration can lead to outsized gains in good times, it also exposes you to catastrophic losses if that single asset or sector performs poorly. 

A well-diversified portfolio acts like a financial shock absorber, designed to weather various market conditions and reduce overall risk, safeguarding the assets you’ve worked so hard to accumulate.

2. Trying to “Beat” the Market

Another common financial mistake I want to mention is trying to “beat” the market.

The allure of outperforming the market is powerful, fueled by financial news and the occasional positive result. However, consistently trying to “beat” market averages is a fool’s errand for most investors, and it’s a common mistake even among those with significant assets.

This often presents as:

• Frequent trading: Constantly buying and selling based on short-term market fluctuations or “hot tips,” incurring large transaction costs and potentially missing out on long-term gains.
• Market timing: Attempting to predict market ebbs and flows, which is nearly impossible. Such attempts often lead to missed opportunities during market upturns and increased transaction costs, ultimately eroding long-term returns.
• Chasing Performance: Investing in what performed well last year without understanding whether that performance is sustainable or if it aligns with your long-term strategy.

At CGN Advisors, our focus is on building a robust, diversified portfolio designed to capture market returns consistently over time, rather than trying to outguess it.

3. Not Utilizing 401(k) Matches

This might seem basic, but it’s astonishing to me how many individuals, even those earning substantial incomes, leave free money on the table. 

If your employer offers a matching contribution to your 401(k) or similar retirement plan, not contributing at least enough to get the full match is a significant financial mistake.

Think of it as an immediate, certain return on your investment—essentially free money added to your retirement savings. For someone looking to optimize their wealth accumulation, foregoing a 401(k) match is equivalent to turning down a bonus or a raise.

4. Underestimating the Cost of Owning Real Estate

Real estate can be a fantastic component of a diversified portfolio and a source of wealth. However, I often see clients underestimate the ongoing costs associated with property ownership, whether it’s their primary residence or a rental property.

• For primary residence: Beyond the mortgage, consider property taxes, insurance, routine maintenance (roof, HVAC, appliances), unexpected repairs (water heater breaks, plumbing issues), and potential HOA fees. These costs can significantly impact your monthly cash flow and retirement budget.
• For rental properties: In addition to all the above, factor in vacancy rates, tenant turnover costs, property management fees (if you’re not self-managing), and potential legal expenses. What might seem like a solid rental income on paper can quickly diminish when these hidden costs surface.

While real estate offers appreciation and potential cash flow, it’s illiquid and comes with substantial carrying costs and management responsibilities. 

5. Not Planning for Unexpected Risks

Life is unpredictable, and while we hope for the most positive outcome, financial planning must account for potential curveballs. A common mistake is focusing solely on growth without adequately preparing for unexpected risks that can derail even the most carefully constructed plans.

These risks include:

Long-term care needs: The cost of extended care (nursing homes, assisted living, in-home care) can be astronomical and is a major financial drain for many families. Medicare doesn’t cover most of these costs.

Disability: An unexpected illness or injury could prevent you from working, impacting your income years before retirement.

Market downturns: While diversification helps, a significant recession or market crash right before or early in retirement can force unwanted portfolio withdrawals.

Healthcare costs in retirement: Even with Medicare, out-of-pocket medical expenses can be substantial.

Prevent Common Financial Mistakes

At this stage of your financial journey, preventing common financial mistakes is as critical as pursuing growth. 

Our team at CGN Advisors, can help you navigate these complexities, confirm that your portfolio is truly diversified, your financial habits are consistent, your assets are safeguarded, and your plan is robust enough to carry you confidently into a fulfilling future. 

If any of these points resonate with you, I encourage you to reach out for a personalized review of your financial strategy.

To schedule a meeting, call our Manhattan, KS, office at (785) 340-3434 or our Rogers, AR, office at (479) 335-1034.

About Nicola 

Nicola Cyr is the Director of Operations & Compliance at CGN Advisors, a Fee-Only, financial advisory firm based in Manhattan, Kansas. CGN’s team of financial advisors is made up of native Midwesterners who are passionate about helping clients plan for the future. An advisor since 2017, Nicola utilizes her in-house tax preparation and planning proficiency to strengthen client relationships with their advisors and the firm as a whole. She appreciates the value and team approach CGN provides, allowing them to offer services in a range of complex planning areas without the need to outsource. Combining her affinity for educating people, financial puzzles, and a personal motivation for excellence, Nicola enjoys the challenge of balancing the quantitative “right answer” with the qualitative aspect of behavioral finance for each unique client situation. 

Nicola holds a Bachelor of Science in Personal Financial Planning and a minor in English from Kansas State University, the CERTIFIED FINANCIAL PLANNER® certification, as well as the Enrolled Agent (EA) designation, which permits her to practice before the IRS. Prior to joining the CGN team, Nicola gained experience as a licensed State Farm Insurance saleswoman and as a research assistant for Stu Heckman, PhD, CFP®, assisting with research papers and development of undergraduate class content.

Nicola and her husband, Ryan, have two sons, Ezra and Elias, daughter, Evangeline, and a faithful hound, Phoebe. Most of Nicola’s free time is spent with family, participating in her children’s extracurricular activities, and nurturing her passion for houseplants (owning and caring for 50+ between the office and home). To learn more about Nicola, connect with her on LinkedIn.

Investment advisory services are offered through CGN Advisors, LLC, a fee-only SEC registered investment advisor. Tel: (910) FEE-ONLY. 

Investing involves substantial risk and has the potential for partial or complete loss of funds invested. Investments mentioned may not be suitable for all investors. Before investing in any investment product, potential investors should consult their financial or tax advisor, accountant, or attorney with regard to their specific situation. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.

The opinions expressed herein are those of certain CGN Advisors, LLC personnel and are subject to change without notice. The opinions referenced are as of the date of publication and are subject to revision due to changes in the market or economic conditions and may not necessarily come to pass. Any opinions, projections, or forward-looking statements expressed herein are solely those of the author, may differ from the views or opinions expressed by other areas of the firm, and are only for general informational purposes as of the date indicated