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How Rules Of Thumb Can Help

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How Rules Of Thumb Can Help
Rules of thumb help you make quick financial decsions without sacrificing a decent outcome
Larissa Fernand - 31 August 2022
A friend of mine just started earning a few years ago. All her money lies in a savings account and two fixed deposits (FDs). When I asked her why all her money is with the bank and why she has failed to invest, her candid reply was very revealing: “I don’t know how much to save. I don’t know how much to invest. I don’t know where to invest. I don’t know where to start. But I know I am wasting time, so then I panic. And I put it in an FD, so at least it earns something.” It is not that she did not have the inclination to invest. It was not that she did not have the means. It was a simple case of choice avoidance and decision paralysis. When faced with too many options, the result can be paralysing. Couple that with being pushed outside her comfort zone and area of expertise. Choosing a mobile phone does not tire her out, but deciding where to deploy her money leaves her with decision fatigue and unhappiness. In such a situation, a simple guideline is the most appealing and practical. Such guidelines are often referred to as financial “rules...
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