A financial planner shares 5 common misconceptions that can put your money at risk

1. Our will and trust covers our retirement accounts

Setting up a will and trust is an important step in your financial journey. It's something most of us know we should do, but we don't always follow through. If you've done it, congratulations. But be careful. If you have retirement accounts you still need to update your beneficiaries.

Wills and trusts need to be amended from time to time as our lives change. We get remarried, kids move out of the house, the list can go on. If you've changed the beneficiaries of your trust, you need to change your retirement account beneficiaries too. Don't assume that your trust or will covers your retirement accounts. They don't.

2. I can borrow money from my IRA

Many people have heard that some 401(k) plans allow you to borrow money from yourself. It is known as a participant loan. However, this is specific to company 401(k) plans, not individual retirement accounts (IRAs). While you can pull money out of an IRA, it isn't in the form of a loan. Doing so will result in taxes. If you're under 59 1/2, it results in extra penalties as well.

3. I can't invest enough for it to really make a difference

When the budget is tight or you're starting out at your first job, it can feel like there isn't enough left over to make investing worth it. However, most people are surprised to find out how a little amount invested over a long period of time can add up to a lot.

If you can start investing $50 per month and achieve an average 4% annual return, after 20 years you would have $17,867. Now consider increasing that $50 per month by 8% each year. Can you guess what happens to the $17,867? It doubles. Small amounts can really add up so wherever you are, get started. 

4. Gold is a safe haven

This is a particular pet peeve of mine. It isn't that I'm against gold as an asset. I'm not pro- or anti-gold. It is simply a precious metal. While it is true that gold can increase in value during troubled financial times, that doesn't necessarily mean it is a safe haven. That gives the impression that it is low-risk which is far from true. If you want safety or low risk, look to FDIC-insured certificates of deposit or fixed annuities. If you're going to invest in gold, fine. But don't think you're keeping your money safe. You're not.

5. Bonds are safe

While bonds tend to be less risky than stocks, declaring them safe is painting with a very broad brush. Not all bonds are created equal. Government bonds are backed by the full faith and credit of the United States. That simply means the likelihood of default is very low. But that isn't the same thing as losing value.

If you buy 10-Year U.S. Treasury Notes now and interest rates rise, the value of those bonds would drop. Of course, if you hold them for 10 years, you would be made whole. What if you needed to sell them before 10 years? You would have to sell them at a discount.