Mistakes happen. Nobody is perfect handling their money.
Even Warren Buffett admits to investment mistakes. The key is to learn from gaffes. That's especially true with money-related slipups, as they can hurt your portfolio. When you mess up financially, and it's costing you money, fix what's broken fast.
Financial advisors shared the costly money mistakes that people made that must be cleaned up in 2025.
Skipping Money Mistakes
Mistake 1: Not investing in the stock market due to politics, says Lisa Featherngill, national director of wealth planning, Comerica Wealth Management.
Cost: The S&P 500 is up roughly 25% this year, versus less than 5% on cash investments. The client who sat on the sidelines for fear the market would tank due to election uncertainty lost the opportunity to earn almost 20% in additional return.
The fix: Start dollar-cost averaging into the stock market, up to the determined equity allocation for your portfolio.
Mistake 2: Not determining a sell price for a stock, says Featherngill.
Cost: Lack of rules can be a missed opportunity to sell the stock at a high before it drops back down. You also don't want to sell too soon due to fear or greed.
The fix: Having a sale price for a stock encourages "taking some chips off the table" when the stock reaches a value that the investor determines upon buying. For example, if the stock was purchased for $50 a share, deciding up front to sell 50% of the holdings when the price is $100 a share allows the investor to recover 100% of their initial investment.
Fixing Your Portfolio
Mistake 3: Diversifying into an asset class that the client doesn't know well without doing enough research, says Melissa Linn, senior wealth planning specialist at Comerica Wealth Management. Examples include real estate and private equity.
Cost: Unfamiliar investments might yield disappointing returns or lock up funds in an asset that cannot be sold.
The fix: Talk with someone who understands these niche markets and can advise on how to reduce the risk of underperformance and lack of liquidity.
Mistake 4: Investors lost sight of their time horizon and abandoned their investment strategy based on negative headlines, says Patti Brennan, president and CEO of Key Financial, and author of "Am I Going To Be Okay?"
Cost: Too much capital sitting in low-yielding assets and not enough money in growth assets, such as stocks.
The fix: Do a realistic analysis of your real cash flow needs to fund your lifestyle. Then figure out whether money is going to be needed from the portfolio. That will determine the time horizon of the investments. Dollars not needed today or in coming years should be invested in higher-performing asset classes that perform best over a long holding period.
Planning For The Future
Mistake 5: Clients who pay much more attention to their estate planning documents than to the beneficiary designations on their retirement accounts, says Anthony Ogorek, president and founder, Ogorek Wealth Management.
Cost: For many clients, their most significant assets by far are in retirement accounts. And they tend to give short shrift to how powerful these tools are as part of their estate plan. Beneficiary designations for retirement account assets override a will and bypass probate. So, if the beneficiary listed isn't up to date, your 401(k) balance will go to the person listed as beneficiary.
The fix: Advisors should present clients with a diagram indicating how many dollars will be transferred via the will or revocable trust. And they should show flows via retirement account or transfer on death designations. Once the client understands the dollars being transferred under each of these instruments, they typically will have a greater appreciation for how each of these tools integrate to create their estate plan.
Mistake 6: People drawn to cash accounts that were temporarily paying high interest rates find net gains after inflation are very small, says Dan Casey, investment advisor at Bridgeriver Advisors and Panic Proof Retirement.
Cost: The flight to safety was a costly mistake, as they gave up double-digit growth in the market.
The fix: It's all about having the right buckets of money and taking the correct amount of risk based on when you want to retire. If you are retired, then you should already have a plan for income and you shouldn't need to touch the growth portion of your portfolio.
Using Your Plans
Mistake 7: Clients not fully leveraging their employer-sponsored retirement plans, says Jason Grover, financial planning specialist, Grover Financial Services.
Cost: Some contributed less than required to receive their full employer match. That left free money on the table. Some people put in just 3% of their salary while their employer matched up to 4%.
The fix: Clients should contribute at least enough to maximize the match and to consider setting up automatic annual increases of 1% or 2%. It's a small tweak with a significant long-term impact.
Mistake 8: Overly conservative investment strategies, especially for clients still 10 to 15 years or more from retirement, says Grover. Many portfolios were weighted too heavily toward bonds or cash, missing out on the growth opportunities stocks provide.
Cost: Playing it too safe can be as risky as being overly aggressive. It may not generate the growth needed to outpace inflation and meet future income goals.
The fix: Revisit your risk tolerance and time horizon. Adjusting allocations to include more equities — while maintaining diversification and stability — can help you stay on track.
Own The Right Stocks
Mistake 9: Being too underinvested in stocks, says Clark Bellin, chief investment officer and financial advisor at Bellwether Wealth.
Cost: Many investors understandably worry about losing money in the stock market. There is uncertainty about the Federal Reserve and interest rates and questions about tax and tariff policy. But the bigger issue is missing out on the market's gains.
The fix: Having a strategy for cash sitting on the sidelines is critical. While stocks are volatile, their long-term returns tend to be superior to other asset classes. Volatility, while uncomfortable, can offer investors the ability to put more money to work in stocks at lower prices.
Mistake 10: Uneasiness about "high valuations" caused several clients to sell most of their equities for cash, only to watch the market surge, says Stephan Shipe, founder and CEO of Scholar Financial Advising.
Cost: Trying to time the market based on fear (of high-priced stocks) can be just as costly as selling due to fear during a market downturn.
The fix: Develop a clear investment strategy and stick to it. Focus on long-term growth rather than reacting to short-term fluctuations. Have a cash-deployment plan in place. This plan should set the amount of money to be invested each month. This can help remove the emotion from decisions.
Mind Your Expenses
Mistake 11: Not keeping at least six months' worth of expenses stashed away in savings or checking accounts, says David Johnston, managing partner of Amwell Ridge Wealth Management.
Cost: Clients might let their emergency fund dwindle down and then face high home repair costs. Turning to higher interest rate credit cards isn't optimal.
The fix: Free up dollars to bulk up your emergency fund.
Mistake 12: Not taking advantage of over-50 catch-up contributions in 401(k) plans, says Johnston.
Cost: Don't pass up on a chance to save more for retirement and save on taxes. Starting this year, savers ages 60 through 63 in workplace retirement plans can contribute an additional $11,250 above the regular 401(k) maximum contribution of $23,500. Those 50 and older can contribute $7,500 in catch-up contributions.
The fix: If cash-flow permits, funnel more of your paycheck into your 401(k).
Too Few Eggs In Basket?
Mistake 13: Being too highly concentrated in one stock, says Johnston.
Cost: Those once-smaller positions in stocks, such as Nvidia, have grown significantly. Now, a single stock can potentially make up a much larger percentage of a client's portfolio than originally intended, creating more single-stock risk.
The fix: Anytime one stock represents 5% or more of your portfolio, you should begin looking to pare back that holding a bit.
Mistake 14: Consistently paying bills late, says Johnston.
Cost: Paying credit card bills after their due dates will negatively affect your credit score and make it much more difficult to secure financing at all or at competitive rates. Payment history is the most important factor in your credit score, making up 35% of your FICO score.
The fix: Pay all your bills on time. To avoid missed payments, set up automatic payments on your due date for at least your minimum balance due.
Don't Over Diversify
Mistake 15: Investing in too many individual stocks, says Glen Smith, CEO and chief investment officer, GDS Wealth Management.
Cost: Owning 50 to 60 individual stocks doesn't necessarily guarantee diversification. And it can be difficult to adequately follow, keep track, and do due diligence on so many different companies.
The fix: Know why you own a particular company. Make sure that each stock you own is in-line with your risk tolerance, as some stocks are much more volatile and speculative than others. A rebalancing of the portfolio may be needed if a new client's portfolio is disorganized and filled with an overwhelming number of stocks with no clear reason and strategy behind each investment.
