Over the last few weeks we have gone over financial pratfalls common to everyone.  I didnít know how to end this series so for the finale I came up with a financial tripwire smorgasbord.



See if any of these ring a bell. 



If you donít realize most financial companies have a business predicated on exploiting the emotions and the lack of financial intelligence of its customers, then you have a problem. An advanced degree, an Ivy League education or acing the SATs matter little to investing success. The most important investing skill is control of your emotions. Investment plans donít fail. Rather investors fail by either taking too much risk during fat years and/or bailing out during the doldrums.



If you hear an investment pitched with any variation of ďItís different this time,Ē run like a scalded dog. Return is tied to risk and always will be. Back in the glory days of South Walton real estate (still pretty good), vast fortunes were made ó need I say more?  In card games, if you donít know who the mark is itís probably you.



When expecting outsized returns, someone carries the risk, donít find out the hard way the beast of burden was you. 



Lots of us are guilty of confirmation bias or only seeking information agreeing with our pre-existing ideas. You have to challenge yourself and sometimes you learn.



Hereís a personal case. For years I rang the claxon warning about the evils of variable annuities. At a conference I was astonished to see scheduled a presentation about the benefits of these loathsome creatures. When pigs fly, I thought, but I went along anyway. I left somewhat humbled. 



Donít get me wrong; variable annuities have common threads with toxic dumps. However, older variable annuities can have 3 to 4 percent guaranteed returns on cash value and with no mortality and expense charges. Show me a money market fund with anything close. Plus older annuities donít use the modern life expectancy table so annuitants receive larger payments.



If I had followed standard confirmation bias operating procedure, I would have blown off the presentation and been a poorer planner for it.  



Young folk, hear me: Each day you delay saving for retirement makes compound interest less effective. Per urban legend, Albert Einstein allegedly said that compound interest was the most powerful thing in the universe.



When I was your age I blew off funding IRAs for multiple years. Donít work hard but be too lazy to fill out 401(k) paperwork and throw away your employersí free money. Young people have time on their side. With a 6 percent return, an investment will double in 12 years. Donít get stressed when the market has a bad day, month or year. You are investing for the next 50 years so avoid worrying about things you canít control.



Donít let political views guide investments. Dumping stocks because your guy didnít get elected doesnít work. While you spent the last five years arguing over economic policy, the S&P 500 rallied a mere 177 percent. The global economy is mind-numbingly complex. Intricate situations have solutions, simple, clear and wrong (with apologies to H.L.  Menchken).



Often doing nothing, a la Paul Newman, is a pretty cool investment strategy.



Buz Livingston, CFP has a Blue Mountain Beach based fee-only, hourly financial planning and investment management firm. For more information, visit www.livingstonfinancial.net or come by our new office at 2050 Scenic 30A, M1-Unit 230, Redfish Village.