Unshakeable

Create systematic solutions to avoid psychological money mistakes

Instructions

Seek qualified opinions from people who disagree with you.
To avoid confirmation bias, find people who can give you a different perspective on the investment you’re making. Find someone you respect and who has the right skills and track record. Then ask them: What am I not seeing or failing to anticipate? Where could I be wrong in this investment decision? What’s the downside? Who else can I talk with to increase my knowledge?
Avoid selling your assets when the market gets emotional.
Create a list of simple rules that can guide you when the market reacts irrationally. In your checklist, clarify where you want to go as an investor, the pitfalls to watch out for, and how you intend to navigate your financial journey. Make sure it’s a long-term plan and share it with a financial advisor that you trust so that they can hold you accountable.
Practice radical honesty with yourself to avoid overconfidence.
Ask yourself, “Do I really have some secret sauce that gives me an edge over the rest of the market?” “Do I have superior intel and analytical skills to become a market-beating investor?” If your answer is No, then there’s no need to think that you can outperform the market long term. Simply invest in a portfolio of low-cost index funds and hold on to them.
Treat investing as a marathon instead of a sprint.
Only check your portfolio once a year instead of looking at its performance on a day-to-day basis. Disregard all the complex information and analysis generated by Wall Street, TV pundits, and market “experts” every day. Instead, be patient and study the wisdom of investors like Warren Buffet to avoid short-term thinking that often leads to bad decisions.
Expand your horizons by investing in different countries.
Create a global asset allocation by choosing to invest both at home and abroad. On your checklist, write down the appropriate percentages to invest in different countries. This will reduce your overall risk because if one country is underperforming, the other countries may be experiencing a booming market.
Prepare yourself mentally for market shocks to avoid panic decisions.
Increase your self-awareness to understand how you normally respond in a crisis. Then ask yourself, “What steps can I take to prevent fear from knocking me off course even in a chaotic market?” Take time to study what a bear market looks and feels like so that it won’t scare you when it occurs. You can also write down your reasons for investing in each of the assets in your portfolio. This will help you stay the course during a crisis, even when you feel like dumping an asset.