Decision Tools
Frameworks, checklists and worksheets for making a decision well.
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Whose plan are you following?
Mistake 1 of 10: investing without your own goals and expectations. Write each goal as a SMART goal, then test it in a best, base and worst case.
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Capacity, willingness and requirement: the three sides of risk
Mistake 2 of 10: taking the wrong amount or kind of risk. Risk has three sides (capacity, willingness and requirement) and three responses: avoid it, reduce it or transfer it.
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Too concentrated, or too diversified?
Mistake 3 of 10: concentrating too much, or diversifying badly. Two ways to get diversification wrong, and a five-minute check for both.
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Why popularity makes value harder to judge
Mistake 4 of 10: buying high and selling low. Money tends to arrive after the good returns and leave after the bad ones, and investors pay for that timing.
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The best days sit next to the worst days
Mistake 5 of 10: timing the market and trading too often. Stepping out to avoid the bad days usually means missing the good ones, because they tend to arrive together.
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What you keep, not what you earn
Mistake 6 of 10: paying too much, or letting taxes drive decisions. Fees compound quietly, and taxes deserve care, but neither should make the investment decision for you.
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Do you know your real return?
Mistake 7 of 10: measuring the wrong performance. Your real return is what your money earned after fees and inflation, against a benchmark you chose in advance.
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Plans fail quietly
Mistake 8 of 10: neglecting the plan. Most plans fail from neglect, not crisis: never started, never reviewed, or stalled on a conversation nobody wanted to have.
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Five checks before you hand anyone your money
Mistake 9 of 10: hiring an adviser without checking. Five checks take less than an hour, and most investors never make them.
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Your savings rate: the lever you control
Mistake 10 of 10: watching returns while ignoring the savings rate. Early in a career, saving three more points can outweigh a point of extra return, and the savings rate is yours to set.