Improving Decision Making

Making sound decisions can be difficult, particularly during the kind of uncertainty our country and economy are currently experiencing. Whether you are making investment decisions or leading a family, business, non-profit, etc., the decisions you make in these roles have short, near, and long-term ramifications for many. While most of our daily decisions are made instinctively and without much thought, occasionally, we confront more meaningful choices requiring thorough analysis. While these thoughts specifically pertain to decisions surrounding investments, similar concepts can be applied when confronting decisions in everyday life. See below for a few ideas on how to gain confidence when making these significant decisions.

Understand You Must Act

As leaders, embracing the fact that we must act is of utmost importance! We do not have the luxury of inaction since even inaction is an act in and of itself. Acknowledging this reality may increase the pressure one feels. Still, I remind myself of a quote from the great female tennis player Billy Jean King when she said, “Pressure is a privilege!”  Recommendation: Embrace the pressure of consequential decisions. It means you are involved in something meaningful to you and your life.

No Absolutes In Investing

The next step after understanding you must act is to accept there are no certainties and that no investor is correct 100% of the time. Investing involves risk. If you expose yourself to risk often enough, you will make mistakes and more than likely learn from those mistakes. The key is to get more answers right than wrong along the way.  Recommendation:  Establish a goal of getting 70% of your investment decisions right. Measure success not exclusively on the results of your decisions but on the process used to get to your decisions.

Analyze and Compare Courses of Action

Analyzing is the most involved step in the process and perhaps the most important. This step consists of gathering facts about different possible investments/courses of action and analyzing the various options to see which best accomplishes your specific goals.

The key here is to gain clarity around the investments 1) Upside potential and downside risk 2) Time horizon (How long does the investment have to work?) and 3) Liquidity (How quickly/ easily can you sell and get cash?)  Recommendation: Be process-driven, goal-oriented, disciplined in your analysis, and act with integrity and values and you will make better decisions!

For weekly insights, follow The Welch Group every Tuesday morning on WBRC Fox 6 for the money Tuesday segment.

 

certified financial planner Marshall Clay wears a gray jacket and white shirt while posing for professional photo in office

Marshall Clay CFP, J.D., is a Partner and Senior Advisor at The Welch Group, LLC, which specializes in providing Fee-Only investment management and financial advice to families throughout the United States. Marshall is a graduate of the United States Military Academy in West Point, New York, the Cumberland School of Law in Birmingham, Alabama, and is a CERTIFIED FINANCIAL PLANNER™.  In addition, Marshall is a frequent guest on local television stations as an expert on various financial planning matters.

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