Three reasons why your investment choices are like a diner’s menu

At a diner it is difficult for people to choose from a thirty page menu. This creates stress and often leads to a bad decision (Sushi??). This is called the paradox of choice. It is often the reason people delay investing. It will interfere with your choice of advisor, type of account, and the investments themselves.

Choosing an advisor is difficult. An alphabet soup of CFP,CFA,CHFC,AAMS drown the soul. Confusion reigns and nothing gets done. The way to combat this is to create a simple screening process. Choose an advisor who is a Fiduciary. This person is legally bound to look out for your best interests. This will eliminate all of the commission based sales people who might give conflicted advice.

What type of investment account should you set up? Traditional or Roth IRA? 401k or Custodial? A simple screen is ask your accountant. They might not be an investment expert but they know your tax situation. They can eliminate the inertia and guide you in the right direction.

  Finally, what investments should go in your account? Hedge Funds, Commodities, Stocks, Bonds, Twitter?? Yikes!!!! Simplify and choose only low cost, diversified index funds. You will not regret this and you can go on with your daily activities.

 The moral of the story is skip the sushi and stick with the meat and potato’s at the diner. Too many choices lead to bad decisions.


For more on this go to a totally awesome blog called Abnormal Returns