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Advisors share their money mistakes. Here’s what they have in common

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  • Members of the CNBC Financial Advisor Council share their biggest money mistakes and what they’ve learned from them.
  • In each case, their younger selves made trade-offs, sacrificing their long-term financial well-being.

Mistakes happen, especially when it comes to money.

Even the most trusted sources of financial information and advice have their own regrets.

Here, members of the CNBC Financial Advisors Council share their biggest financial disasters and how they’re doing it now. In each case, their younger selves made trade-offs, sacrificing their long-term financial well-being.

If you can learn from them, you may not fall into the same trap.

Money mistake: “We didn’t negotiate the starting salary.”

“When I first started financial planning, I thought I won the lottery with a $40,000 offer on my 401(k) and 4% match.” Sophia Bella DaigleCEO and Founder Generation Y planningis a millennial financial planning firm based in Austin, Texas. That elation led to the mistake of “I didn’t negotiate my first salary.”

But the next year, the economy plummeted, annual raises were shelved, and her employer canceled her 401(k) match, she said. “Financial her first five years of planning, I made the same amount of money.”

Wages were particularly stagnant during the Great Recession, but salaries are back in the spotlight as inflation weighs heavily on most workers’ financial positions.

Even so, more than half of the workers do not negotiate even if they receive a job offer. career builder found.

Still the negotiations go well. According to Fidelity, 85% of Americans and 87% of professionals aged 25 to her 35 disputed salary, benefits, or both, but received at least a portion of what they asked for. rice field.

Confidence is key, says Bella Daigle, a certified financial planner and member of CNBC’s Advisory Council. Know your worth and what you want. It could be a higher salary, more opportunities for promotion, flexibility, or vacation time.

“If the answer is a firm ‘no,’ ask what it takes to consider a raise in six months,” she advised. “It’s really helpful, too.”

money mistake: “Too Much” Car Leasing

Thianchai Sitkonsak | Photo Moments | Getty Images

Winnie Sun, co-founder and managing director of Sun Group Wealth Partners, based in Irvine, Calif., said, “My biggest money mistake was hiring Smith Barney as an early financial advisor. “A colleague at the time encouraged me to buy a new luxury car and said that given what we were doing, leasing would be a good option. rice field.”

So Sun, a member of the CNBC Financial Advisor Council, put a ton of money into his dream car. “I signed him for a three-year contract and a shiny white convertible. He has done a lot with Mercedes-Benz.

“Was it beautiful? Yes,” she said. “Was it the right way to spend my money? Absolutely not.”

New or used car financing is even more expensive these days, new research shows.

Learn more about Ask an Advisor

Here are the FA Council’s views on how to navigate this economy while building wealth.

With interest rates rising and car prices rising, the percentage of new car buyers paying more than $1,000 a month has soared to a record high. edmondsAccording to Ivan Drury, director of insights at Edmunds, more consumers are now facing monthly payments and likely won’t be able to pay.

Sun said hefty lease payments have come at the expense of other investments. “I could have done more with that money and invested in it for the future.”

In fact, most experts advise spending no more than 20% of your take-home pay on your car, including payments, insurance, fuel or electricity.

I never bought a new car for myself again.

Winnie Sun

Managing Director of Sun Group Wealth Partners

You may be better off with a used car. A certified pre-owned vehicle (usually one whose lease has ended) often includes a warranty, taking a lot of the worry out of buying a used vehicle.

“I never bought myself a new car again,” Sun said. “The money you save goes into your kids’ college savings accounts, which are growing well and is definitely worth more than a leased car.”

Money Mistakes: Betting Everything on Technology

Carolyn McClanahan, CFP, founder of Life Planning Partners in Jacksonville, Fla. “We invested in tech stocks, and we invested in everything that was risky.”

These same companies largely fell when the dot-com bubble burst in 2000.

“We lost a lot of money when the market crashed,” said McClanahan, who is also a member of CNBC’s Advisory Council.

“Had we known about decentralization and used a low-cost, passive approach, we would have fared much better.”

When it comes to investing, most experts recommend a well-diversified portfolio of stocks and bonds, or a diversified fund like the S&P 500 index fund.

Investors should also regularly check and review their investment allocations to ensure that they are still working in their favor.

Money Mistakes: Unloading Inherited Stocks

“My wife inherited a stake in Philip Morris from her father,” said Lee Baker of CFP, based in Atlanta.

However, the couple struggled to own stock in the tobacco giant, as smoking contributed to his death. At the same time, he said, “There was some discussion in Congress about the sin tax, so I thought it would be a good time to sell.

But the law failed to get off the ground and Philip Morris continued to thrive.

“The biggest lesson for me is to be careful about making investment decisions based on what politicians say they want to do,” said the founder, owner and president of Apex Financial Services and CNBC’s Baker, a member of the Advisory Council, said.

Phacharanan Worapacharelogi | Moments | Getty Images

Still, some investors believe it’s important to consider backing companies that reflect their values ​​and lifestyle.

“Today, when I talk to clients about inherited stock, I take the time to find out if they have a positive or negative sentiment about the stock,” he said. “If you can grasp the emotional side of the equation, you’ll be in a better position to discuss stocks from an investment perspective.”

For some, that may mean keeping portfolios away from tobacco ownership, even though stocks like Philip Morris have proven winners within the vice group.

Money Mistakes: Not Thinking about Nursing Care

Most families don’t think about long-term care until a health crisis occurs.

said Louis Barajas, CEO of International Private Wealth Advisors in Irvine, California. He is his CFP and also a member of CNBC’s Advisory Council.

“It’s either our procrastination or we’ve been too busy,” Barajas said. Meanwhile, his wife, Angie, was diagnosed with colon cancer. “It’s going to be more expensive now, and it might be out of our hands,” he said.

From traditional long-term care insurance to hybrid insurance that combines life insurance and long-term care coverage, there are insurance options to help offset costs. However, in general, the younger you are, the cheaper your premiums will be.

According to Policygenius, premiums increase by an average of 8% to 10% each time you defer purchasing coverage.

“You have to start thinking about the present with one eye and the future with the other,” said Barajas.

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