Avoiding the Big Mistakes

Ben Carlson was spot on this week when he wrote “there are many different ways to make money in the markets. But I think that there are a few universal ways to lose money.” Here are some ways to ensure you are unsuccessful managing your finances:

  • Spend more than you earn.
  • Refuse to budget.
  • Track your investments daily.
  • Do what the “experts” on CNBC recommend.
  • Frequently change strategies.
  • Purchase products with high fees.
  • Avoid having a plan at all.

So much of being successful, financially and otherwise, simply consists of not making the big mistakes. You don’t have to hit homeruns - just don’t strike out. To paraphrase Shane Parrish, avoiding stupidity is easier than seeking brilliance. Charlie Munger said “It is remarkable how much long-term advantage people like  [Warren Buffett and myself] have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” Rather than focusing on perfection, look to minimize the errors.