Make Big Financial Decisions Without Overlooking Small Details
In The Art of Spending Money, Morgan Housel explains how emotions and psychology influence our use of money. He highlights a paradox many recognize: Small savings add up, yet those gains can disappear if you ignore major costs such as housing, college, and other large commitments.
Both matter. Long-term success often comes from making the right big decisions and consistently stacking small, sensible wins on top. The same applies to investing.
What Spending Teaches You About Investing
Small spending choices compound over time, and so do small investing decisions: thoughtful fee control, careful tax management, and disciplined implementation. But these “crumbs” cannot compensate for getting the big things wrong. In investing, the biggest decision you make is how much risk to take, most expressed through your asset allocation: the mix of stocks, bonds, and other assets you hold.
Two investors can hold similar funds, pay similar fees, and follow similar tax tactics. Yet if one is positioned at the appropriate level of risk for their goals and timeline and the other is misaligned, their long-term outcomes can differ dramatically. Asset allocation is the engine; other decisions are tuning and aerodynamics. Both matter, but the engine drives most results.
The Big Thing: Choosing the Right Amount of Risk
Many investors default to a moderate portfolio out of caution or habit, even when their financial circumstances, time horizon, and goals could support a higher level of risk and a higher expected return. Others take more risk than their plan requires, which can backfire when markets become volatile.
Getting this risk decision aligned with your personal plan is often the single most important driver of long-term results. It should be grounded in:
- Your purpose for the money (what it’s for and when you’ll need it)
- Your ability to take risk (based on cash flows, time horizon, and resources)
- Your comfort with risk (so you can stay invested through difficult periods)
The Small Things: Why Details Still Matter
If asset allocation is the engine, details are the finely tuned calibration:
- Fees: When two investment options are substantively equivalent, lower costs increase the share of returns you keep. Over decades, a few fractions of a percentage can matter. Not all investments are equivalent, and fees differ greatly depending on the investment type, but a laser focus on value received per unit of cost is an important criterion to scrutinize.
- Taxes: Choosing tax-efficient investments, thoughtful asset location (which investments in which accounts), and tax-loss harvesting can add meaningful net-of-tax value, especially for taxable investors. We often say, “don’t let the tax tail wag the dog,” but we also know “it’s not what you make, but what you keep.”
- Implementation: Thoughtful trading, cost-aware rebalancing, and minimizing “friction” (like unnecessary turnover) can help preserve returns.
None of these can rescue a misaligned portfolio, but together we believe they can help enhance outcomes when your strategic risk level is set appropriately.
The Biggest Mistake: Abandoning Strategy at the Worst Time
Markets give you plenty of opportunities to doubt your plan. It’s easy to talk about portfolio risk when skies are clear; it’s much harder to hold your ground when headlines are bleak and account balances are falling. The most damaging mistakes often come from abandoning a sound strategy during periods of stress: selling low, reducing risk too late, or pausing contributions right before a rebound.
Preparation beats prediction. If you’ve aligned your risk with your plan, funded appropriate reserves, and set clear rules for rebalancing and withdrawals, volatility becomes something to endure, not a reason to abandon the plan.
Seeking Certainty in an Uncertain Market Guidebook
5 Do and Don’t Best Practices – This guide outlines five key practices to help you stay grounded, think clearly, and make decisions that align with your long-term goals.
Where Advisors Add Value
A disciplined approach, the calming words of a trusted advisor, and a plan that clearly spells out why you’re investing and how your portfolio will fund your future can make a difference when markets or life throws you a curveball.
At Savant, we think about the partnership this way:
- Our financial advisors take time to understand each client’s goals and circumstances to help evaluate an appropriate investment strategy and portfolio. they also educate and prepare Clients to remain disciplined when markets become uncertain.
- Our investment professionals focus on implementing evidence-based portfolios, managing costs thoughtfully, and maintaining alignment with clients’ objectives. Attention to these details may contribute to improved long-term consistency.
It’s not either/or. The best outcomes often come from pairing meticulous implementation with thoughtful, human advice.
Bringing It All Together
Like spending, investing isn’t about perfection. It’s about getting the big things right, such as choosing the appropriate level of risk for your goals, and then consistently making small, sensible decisions along the way. That combination, sustained over years, may help create meaningful results.
If you’d like help assessing whether your current risk level fits your plan and you’re capturing the small, cumulative advantages available along the way, talk with a Savant advisor. We’re here to help align your portfolio with your purpose and help you stay the course when it matters most.
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your investment professional regarding your unique situation.
C. Zach Ivey
Chief Investment Officer
CFA®, CFP®, MBA