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Sensible Finances

I was working on my deck this weekend when I realized something – eyesight + math is better than math alone.

This got me thinking about investing and our decision making. I have often said that a little common sense will save a lot of people a lot of grief and, if I think of eyesight as common sense, my experience this weekend makes sense.

Just as spacing 2X6s needs to meet the litmus test of “does this look right,” so does decisions with money. A few years ago, there was a “charitable gifting” program where you put in $5000 and get a $20,000 tax receipt. It was difficult to understand, convoluted and, ultimately, fraudulent – but the only tool you needed in order to see through it was your common sense. How can $5000 equal $20,000?

If you find yourself on the phone with someone calling you asking for your Visa card number so you can “win a free trip,” you can consider this: “would I give my phone number to someone I know? How about someone I don’t know?”

And the same thing with investments that promise high long-range rates of return. Does 12%, 15%, 18% make sense these days with little or no risk?

As with the deck, math is good, but the eyeball is a good double check. For the record, I had forgotten one thing, re-did the math and it did make sense at that point. But having a quick eyeball at it was all it took to make sure it was right. Don’t forget your common sense. And if you need a second set of eyes, your financial advisor is always available to help you out.