When Not to Make a Major Financial Decision

Have you ever made a financial decision that didn’t turn out right? Personally, there are money decisions I wish I could do over. As humans, we are prone to conditions that could cloud our judgement and lead us to making the less than optimal financial choice.

Never make major investment decisions under duress. Don’t be coerced into making an investment in “once-in-a-lifetime opportunities” that seem too good to be true. In the words of Warren Buffett, “never invest in a business you cannot understand.”

Avoid making major financial decisions immediately after a life altering event such as bereavement or divorce. When the emotions are still fresh, you’re not likely to be at your rational best.

Don’t make a major money decision while you’re tired. Fatigue and sound decision making don’t mix. This is true generally in life and no less so in financial matters. In a tired state, you are less likely to carefully consider the pros and cons of the decision at hand.

Sometimes the best decision is to do nothing. Be willing to pass on making major financial decisions on the fly.

2 Responses

  1. I would also add watch for decisions based on fear. Granted, some fear is OK… You buy life insurance out of concern for family if something should happen. I am talking about making decisions too quickly because of fear and not doing full diligence. Say your car has an issue and fear could motivate you to not get a second opinion on a costly repair … ditto for homeowner issues.

    Liked by 1 person

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