7 Financial Things to Avoid

Screen Shot 2016-07-25 at 11.17.55 AMHow To Go Where You Want Without The Detours

There are many different paths that you can take towards financial well being and several things that should be avoided along the way. I’ve put together a list to help.

  1. Avoid annuities because they are an expensive, overly structured, and complicated “solution” to the wrong problem (risk aversion). Annuities are sold because they generate high sales commissions. Very few financial circumstances are well served by annuities.
  2. Avoid focusing exclusively on your investment portfolio. The portfolio is not a substitute for a financial plan. If you are watching your portfolio every day and worrying, you likely don’t have a plan. Financial planning can’t make short term variability disappear, but it can help avert dangerous reactions to short term events.
  3. Avoid trying to make sense of financial ”news”, Federal Reserve policy or ruminations from Congress or other policy makers about financial issues. Very, very little of this is meaningful and none of it is controllable.
  4. Avoid making financial decisions under stress. As Professor Dan Ariely reminds us in this clip, our brains are not wired to make financial decisions even in the best of times. Add a layer of emotion and the results can be disastrous.
  5. Avoid thinking that your “rugged individualist” instincts are good for making financial choices. Successful individuals tend to think that they can bluster their way through and are reluctant to accept help. Find a fiduciary advisor, (like us), that can provide behavioral coaching.
  6. Avoid big bets. Sure, we all like homeruns but the key to wealth wellness is consistency and avoiding big mistakes. High reward usually means high risk. Follow your financial plan and design your portfolio to capture the return you need to fund your plan. Remember your “enough”.
  7. Avoid relationship break-ups, particularly later in life. This may seem out of place on this list, but marriage and business break-ups can be financial planning killers. Sometimes this is beyond your control but effort expended on maintaining long term relationships can be important to your long term financial future.

Wealth wellness comes about through a combination of what you do and what you avoid. Ready for a real conversation?

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