The top 10 financial planning mistakes

  • Wealth Matters: The top 10 financial planning mistakes
    How otherwise smart people make bad investment decisions

    By Bruce Dzieza

    Bruce Dzieza

    I’ve been working with people and their money for over 30 years and there are some very basic mistakes I see folks make. Many of these seem like no-brainers, but in reality they are issues that get in the way of growing and maintaining wealth.

    We work with a lot of very smart people who have been successful at accumulating wealth, but somehow, financial IQ doesn’t necessarily follow business or academic intelligence.

    Here are my top 10 money-management mistakes you should avoid:

    1. You let your political views direct your investment decisions. Markets don’t care what party is in office or what the latest cable news outlets have to say.
    2. Your history of predicting bad markets is terrible, yet it doesn’t stop you from trying to predict what the market will do next. So, stop trying to be a market guru and trust the overwhelming evidence that trying to pick markets or the next best stock is a loser’s game. Decades of research overwhelmingly prove the futility of trying to time the market!
    3. You work at a stressful job so you can make enough money to be less stressed! Do you see the irony in this? If your job or career is not suited for you, then the best financial advice is to find another career where you can love your work. The right livelihood usually results in higher earnings and better health.
    4. You mistake your financial successes with skill and failures with bad luck. Yes, there is some luck involved (inheriting money does not make you a smarter investor) but generally those who regularly save and invest prudently do very well over time.
    5. You say you will be greedy when others are fearful (ie. Warren Buffet) but then shrink with fear when the market drops 4 percent. Don’t fool yourself into thinking you are more of a risk taker then you really are – think back to 2008 and what you did then. Prudent investing means that sometimes you will lose money, but staying the course has always proven to be the most successful strategy.
    6. You work so hard at making money yet don’t take the time to plan your finances. Most people spend more time planning vacations than they do their financial futures!
    7. You don’t ask your financial adviser how he or she gets paid. Ask your adviser if she/he is acting as a fiduciary on your behalf. Fee only advice from an experienced and qualified adviser equates to objective, impartial counsel. Be wary of commissions, they can encourage more trading then necessary and can get in the way of putting your best interests first.
    8. You think that your neighbor is living the high life and you think it’s because they are some investment geniuses, not because they inherited a lot of money from their parents who owned the local corner grocery story and saved most of their money. (Or, they may be living beyond their means and deep in debt!)
    9. Your pessimism about investing stops you from making smart investment decisions. So you do nothing instead of taking control of your finances and getting needed help.
    10. You use a doctor to manage your family’s health, an attorney to help you with your estate plan, a mechanic to fix your car but when it comes to your personal finance you listen to CNBC.

    Bruce Dzieza, CFP, is the founder of Willow Creek Wealth Management, Inc. (707-829-1146,, Sebastopol, and has been in practice since 1984. He has been recognized as one of Barron’s Top 100 Independent Financial Advisers nationwide. As a certified financial planner, Bruce devotes much of his time working with clients on their overall life goals. Bruce heads up Willow Creek’s investment committee, taking the lead in researching new investment vehicles and in determining the asset allocation strategies that the firm uses in constructing portfolios. Wealth Matters is a monthly column from the firm’s advisers.

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