Not knowing the tax implications of your investments
We've already established that investing in your 401k and your Roth IRA is a smart investment move, but it's important to know how your money is taxed in each account. If you are storing away a ton of money in your 401k, know that if you ever need to withdraw that cash before you retire, you'll be charged a 10% penalty, plus taxes on any gains -- to be fair, you'd be charged that even when you withdraw your money when you retire, too.
So if you contribute the max amount of $5,500 per year, and in five years it grows to $7,500, if you need the money, you can take out the original $5,500 without any penalty. “It’s like a backup, backup emergency fund for my clients,” she says. “That’s why I encourage people to put money towards the Roth IRA.”