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Hats, Haircuts, and Tattoos

Hats, Haircuts, and Tattoos

February 29, 2024

I read a book two years ago titled Atomic Habits, by James Clear. The book is a colossal bestseller that has sold 15 million copies worldwide and has been translated into 50 languages.

Atomic Habits focuses on the power of habits in shaping our lives and how we can change them to achieve more productive results over time. Because I liked the book, I subscribed to James Clear’s free newsletter, which comes via email once a week and includes thoughts from the author, as well as interesting quotes from others.

What follows is a quote from Clear, which appeared in his most recent newsletter. I liked it so much I wanted to share it with you all:

“I think about decisions in three ways: hats, haircuts, and tattoos.

Most decisions are like hats. Try one and if you don’t like it, put it back and try another. The cost of a mistake is low, so move on quickly and try a bunch of hats.

Some decisions are like haircuts. You can fix a bad one, but it won’t be quick, and you might feel foolish for a while. That said, don't be scared of a bad haircut. Trying something new is usually a risk worth taking. If it doesn't work out, by this time next year you will have moved on and so will everyone else.

A few decisions are like tattoos. Once you make them, you have to live with them. Some mistakes are irreversible. Maybe you'll move on for a moment, but then you'll glance in the mirror and be reminded of that choice all over again. Even years later, the decision leaves a mark. When you're dealing with an irreversible choice, move slowly and think carefully. “

 Some investments, usually owing to their small size, are little more than hats. Let us say around 10% of them. If we get a great result, we will be happy, but our daily life probably will not change much.

Other decisions, because of their size and potential to impact our lives, are certainly tattoos. Perhaps, those truly momentous ones make up another 10%, give or take. For example, you cannot sell your home and then change your mind after a couple of months have passed. You will want to think hard before putting that “For Sale” sign on the lawn.

The majority of financial decisions, however, probably fall somewhere between haircuts and tattoos. Most are not large enough to be earth shifting, but we certainly do not want to get a lot of them wrong.

If you think about it, this means that around 90% of our financial choices range from meaningful to critical. For this reason, I believe we should simplify things and take the “tattoo” view of them all. That is, we should treat all our money decisions with the time and attention they warrant.

Advertisements for financial companies and products can make it seem as if there are a limitless number of choices. In truth, there are far fewer choices available to us than most folks have come to believe.  

The appearance of variety is created from two main sources. The first is the vast number of companies providing financial products. The second comes from the bewildering variety of names given to each company’s investment offerings. Marketers and advertising agencies give lots of exciting names to what amount to the same handful of instruments.

The basic lineup of options are stocks - and stock mutual funds-, bonds -and bond funds-, insurance, annuities, real estate, and commodities. To be sure, there are other options such as private equity, hedge funds, structured products, private business investment, hard money lending and others. However, these are only appropriate for a small percentage of what is referred to as “sophisticated,” i.e. wealthy investors.

A quick note; do not believe for a moment you are missing out on anything special if you do not invest via these less common avenues. The track record of success for investors in hedge funds, private equity, and the like is dubious at best. In other words, exotic investments provide no more assurance of investment gains than the usual options and in some cases they do worse.

Once again, for mere mortals the constellation of options is fairly small. One of the advantages of working with a competent financial professional is that they can see through the smoke of marketing and lay out your options in a way that is clear.

A second advantage is that we can help you compare the pros and cons of various savings and investment strategies. And make no mistake, they all have pros and cons. We must remember that life does not give us exactly what we want, it gives us choices. And those choices invariably involve tradeoffs.

Once the options have been laid out, explained, and you have taken all the time you need to gain a clear understanding, there are two more steps that are crucial. And please give this careful consideration, because they represent massive blind spots for a number of good people I have worked or interacted with.

The first of the final two steps is to subject what you already are doing with your money to the same level of scrutiny you are subjecting new investments. The woman who has only invested in real estate tends to be cautious when considering stocks. The man who has only invested in stocks/ mutual funds might look skeptically at insurance or annuities. This is not only understandable, but infinitely reasonable.

But I wonder, how often has this successful woman taken the time to evaluate all of her real estate holdings? Are they all producing what she would like, net of expenses and her investment in time?

And the gentleman who loves stocks, is he truly the exception who is getting outsized returns year after year? Or has he fallen into the all-too-common groove of counting the winners but not the losers and ignoring the risk of catastrophic loss as he ages? I have to wonder if both these folks are simply creatures of habit.

This brings us to the final step, taking action. Once the process of gathering and evaluating information is complete, we can only benefit if we act on our analysis. James Clear has something interesting to say on this as well…

“There is a difference between moving fast and rushing. You can move fast and be thoughtful.

When you rush, you sacrifice thoughtfulness.

Conversely, when you are thoughtful but not moving fast, you are overthinking it. Procrastination in disguise.

Don’t rush, but don’t wait.”

I am not a tattoo person. I do not hate them, but neither do I love them. However, if forced to get one, I would certainly take my time and weigh my options carefully. This is a good way to approach financial planning. By all means, gather as much information as possible and take whatever time is necessary to evaluate it. That is the core of good planning. While you are at it, look critically at what you are already doing to confirm you are still getting what you want. Once you have done all that, take action.

If you would like assistance in this process, call Scott McGimpsey at (732) 844-3000. I am here to help.


Scott R. McGimpsey February 29th, 2024


This material was prepared by Scott McGimpsey and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Neither Cetera Advisor Networks LLC nor Scott McGimpsey is engaged in rendering legal, accounting, or other professional services. If such assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any federal, state, or municipal tax penalty. Moreover, a diversified portfolio does not assure a profit or assure protection against loss in a declining market. UNIFIED PLANNING GROUP is an independent firm.