My Best Money Advice

Managing money is work. In addition to the global meltdown that’s going on I must continuously optimize my cost of living, make sure I’m earning enough, avoid taxes, save for retirement, and donate generously. Plus the mild anxiety of whether I should keep HBO and Netflix and Disney+ or cancel something.

I’ve learned two strategies that help with my significant financial decisions.

#1. Prevent Crying in the Shower

What investments should I buy and which should I sell? For such decisions I’m paralyzed by uncertainty:

  • If I do invest the stock might collapse, yet
  • If I don’t invest the stock might surge.

Rather than trying to maximize my best-case celebration I try to minimize my worst case regret. Hold enough that I won’t cry missing out on a rise, yet not so much that I’ll cry upon realizing a fall.

Note that this strategy requires ongoing work: as my financial situation and the markets change I have to keep adjusting my portfolio.

#2. Sell Slowly. Buy Slowly.

To implement the above I gotta sell stuff (such as vested equity) and buy stuff (such as index funds). But with each transaction I’m exposed to unwanted volatility. What if the price moves the day after I sell?!

So I spread it out over time. Rather than selling 100% of an asset all at once, I sell 10% each month. This avoids the tears of bad timing.

Boring is Good

This isn’t original financial advice! But it’s been easy to follow and has worked for me.