Suze Orman: These Are the Biggest Mistakes You’ll Make With Your Money

Most people struggle with money, but even one small financial misstep can impact your short- and long-term goals.

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In a recent podcast episode, money expert Suze Orman discussed common mistakes concerning money management, particularly regarding retirement accounts. According to Orman, “The biggest mistakes you will ever make with your money are the mistakes you don’t even know that you are making.” Specifically, knowing the difference between a rollover and a transfer.

For instance, when you take money out of your IRA or Roth IRA and put it back within 60 days, that’s known as a rollover, Orman said. You can only do this once every 365 days, she explained. If you don’t wait the full 365 days, IRS rules state that there are tax consequences.

A transfer is when you have money in an IRA, and you want to change the brokerage firm or credit union where it’s held. The transfer goes directly to the new brokerage firm or credit union and doesn’t pass through your hands. You can do this as many times as you wish.

This isn’t the only common money mistake people make. Here are additional financial mishaps experts frequently see people engage in .

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Not Prioritizing Maxing Out Their Company’s 401(k) Plan

“Ironically, one of the biggest money mistakes people make is not participating to the fullest extent in their company’s 401k plan — specifically, to the level at which they receive the full employer match,” said Robert R. Johnson, professor of finance at Heider College of Business, Creighton University.

Instead, Johnson said that many people prioritize putting their money toward paying off student loan debt. “If you don’t participate at the level to earn the full employer match, you are essentially turning down free money,” he added. Plus, your 401(k) contributions can help lower your taxable income and current tax bill.

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Not Investing in the Right Type of Retirement Account

“One common mistake that I have observed is not maximizing the benefits of retirement accounts, as many people are not aware of the different types of retirement accounts available and end up investing in one that does not align with their financial goals,” said Michael Collins, CFA, founder and CEO of WinCap Financial . Collins explained that this can result in lower returns, missed opportunities for growth and potential tax consequences.

Taking Too Little Risk With Retirement Plans

Another common money mistake is taking too little risk with retirement plans. “By their very nature, retirement plans have a long time horizon,” Johnson said. “The surest way to build true long-term wealth for retirement is to invest in the stock market.”

Citing data compiled by Duff & Phelps, Johnson explained that since 1926, the average annual return on a large capitalization stock index is 10.1%. Based on these historical averages, Johnson said an investor could double their money in slightly over seven years — and have 10 times more in 23 years.

“There is an old Wall Street adage that states, ‘You can sleep well or eat well,'” Johnson stated. “You will sleep well if you commit funds to low-risk investments like money market funds or Treasury Bills, but your investments will not grow substantially and may even have trouble keeping pace with inflation. You will eat well by consistently investing in stocks.”

This article originally appeared on GOBankingRates.com : Suze Orman: These Are the Biggest Mistakes You’ll Make With Your Money