5 mistakes we see in DIY financial plans | EP065

Financial mistakes happen more often than you think.DIY financial planning is not just “hard.” It’s easy to build something that looks fine on paper, but is actually fragmented, outdated, and full of hidden risks.In this episode, Dave Grant and Heather Townsend walk through the top five mistakes they see in DIY financial plans, from vague goals and messy portfolios to bad insurance coverage and outdated strategies. They also get into the deeper truth most people miss: money can’t fix a life you don’t feel excited about, but it can be a powerful tool to help you rebuild direction and fulfillment. What you’ll learn… • Why most DIY plans are fragmented: money “over here,” accounts “over there,” and no single purpose • Mistake #1: no real goals (or goals with no cost, timeline, or plan) • How to turn vague goals like “remodel the house” into SMART goals with parameters • Mistake #2: poorly designed portfolios (too much in a 401(k), overlapping funds, random target date mixes) • Why multiple advisors often multiply the mess (and can wreck tax optimization) • The dividend trap: ordinary dividends taxed at the highest bracket for high earners • Mistake #3: cash drag (especially for business owners with feast-or-famine cash flow) • Mistake #4: bad insurance “defense” (state minimum auto coverage, missing umbrella, outdated life/disability) • Mistake #5: the deeper one: being unfulfilled, and trying to use money to fix it • Q&A: how often to get a DIY plan reviewed, and what to tell a spouse who doesn’t want an advisor Chapters00:00 Cold open: state-minimum insurance with high net worth assets (and getting heated) 01:05 The premise: you can’t DIY taxes, insurance, estate, investing, and everything else forever 01:44 Mistake #1: money with no goals (no direction, no purpose) 02:15 “People are floating”: why most goals are too vague to plan around 03:06 The ultra-wealth example: no goals means no plan (even with experts in the room) 04:30 The SMART goal example: house remodel with cost, timeline, and order of operations 07:16 Adults stop dreaming (and why that matters for your money) 08:01 Mistake #2: poorly designed portfolios (401(k) only, overlap, and randomness) 09:48 The overlap problem: picking the “best funds” that are basically the same 10:38 The target-date fund mess (2035 + 2040 + 2045 + 2050 all at once) 12:02 Two advisors managing the same thing (and why it breaks optimization) 12:47 Dividends without tax context: “Are you kidding me?” 13:14 Mistake #3: cash drag (Roth and brokerage money not invested, too much cash held) 14:18 Mistake #4: bad insurance coverage (state minimums, missing umbrella, outdated coverage) 16:27 Defense first: why insurance is “defense” before offense investing 20:26 Mistake #4 continued: outdated approaches (tax law, Roth/529 changes, inefficient investments) 23:39 State estate tax story: why your state rules can cost heirs big money 25:13 The teaser: “ILITs” and outdated planning (and why they’re saving it for another episode) 25:59 Mistake #5: unfulfilled life, money can’t fix it (but it can help as a tool) 30:45 The recap “bow”: goals, defense, account titling, allocation, accountability 32:10 What Would You Do? Q1: How do I keep a DIY plan accurate and up to date? 33:21 Q2: Convincing a spouse to hire an advisor (the best argument) 35:18 Q3: How often should I get my plan reviewed if I’m DIY? 36:54 Highlights On this channel, we cover Social Security, tax strategies, IRAs, 401(k)s, job changes, inheritance, and more so you can feel confident about your retirement plan and prepared for the risks that could affect your money along the way.Want to submit a question for a future episode? Visit https://playbookotw.com or email [email protected].