In last few decades, airlines industry had a major transformation. One of the major shift had been towards safety while flying. A lot of effort had gone behind studying the various air accidents and now globally most of the airlines use an extensive checklist. These checklists help cabin crew, ground staff and pilots to ensure everything is taken care of and nothing is missed out while flying.
This checklist is not intended to take away the intelligence and experience of the pilots but it gives them the ready reference to possible mistakes / errors that could be easily overlooked.
Similarly, a lot of research has been done in hospitals to reduce death related to spread of infections. At John Hopkins Hospital, in early 2000s, the doctors have decided to use checklist while conducting surgeries and in critical care units (ICUs). These checklists were usually being with simple points such as doctors washed their hands with soap, use sterile clothes/gloves etc?
This process of using checklist resulted in reduction of infections in ICUs from 11% to 0% over period of time.
These checklists did not take away the ability & skill of the doctors, it only ensured that the most obvious simple steps are not over looked which can be a reason for disaster.
If you have ever heard / read about the famous and richest investors, while choosing the stocks, follow either a printed checklist or mental checklist. This is only to ensure that the simple errors are avoided.
Now what is the checklist you and me should have while preparing for our financial independence and while saving for our financial goals?
A simple checklist can be like this:
- Do I have clear written financial goals with time in hand?
- Do I have asset allocation i.e. all my investments are not in one asset class?
- Before investing, do I know what is the worst downside of this investment in next three years?
- Do I have one / two years of expenses in safe /liquid asset class?
- Do I invest every month towards these financial goals?
- Are these monthly investments automated?
While these are simple few points on checklist, why do we need them??
We need them because, in today’s free information rather excess information era, we are often bombarded with too many choices, too many opinions about everything and anything. How do we stay uninfluenced and take rational decisions which will help reaching our financial goals.
Hence it is important for every one of us to takeout time and make a checklist and keep ticking it every time there is an emotional influence to take decisions on our investments.
When I say this what I mean is, every time you hear noise in the news about stock markets or economy or investment avenues, go back to checklist and check what is important to you and are you on track with your planning.
If you do not have a checklist, do spend few hours this weekend to make one and don’t forget to follow it religiously.
Wish you happy & safe investing!!!!