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DECISION MAKING FOR PERSONAL INVESTMENT (Part 1)

The most significant point to remember is, there is no one certain technique to make a decision choice. It should all be based on your desired destination and you ought to seek out as much information as possible. The more we learn about the various segments of decision- making framework, the simpler it will be to make decision choices that will be the most beneficial.

The approaches we use to make decision choices will vary from time to time and some are least likely to get you where you want to be than others. For instance, when you use perceptual biases in making your decision choice you are diminishing your chances and choosing to let the outcome to be removed from control. It doesn’t allow you to educate yourself on the outcome and is not an appropriate manner of making a decision choice due to the lack of effort exerted.

Another way we make decision choices is through pathways. We continue to make decision choices the way we always have. The way we were taught by our parents and/or through habit. This tactic only leads us in a circle and keeps us from ever-pursuing change or advancement. Finally, there are the six dominant pathways we have available to make decision choices. This is where we weigh our options, view the pros and cons and make sure that we are going to get our preferred result. This is the way we want to train our minds to make decision choices. It is an educated approach that permits us to practically determine the outcome. Smart decision making is all about perceptual expertise and making good judgments.

If ever you are at a point of not knowing why you are about to make a decision choice be sure to take a minute to stop and evaluate it. Analyze the type of decision it is and then choose to logically make the decision by assessing the pros and cons and selecting the answer that gives you long- term success. This should open up some thought and keep you from feeling the effects that will come if you simply choose to emotionally decide.

For some of the clever decision-making processes may cause feelings of anxiety or uncertainty. Due to the old conditioning and poor deci- sion choice biases or heuristics (i.e., rule of thumb) that we are used to taking, a step onto new territory may seem intimidating and may cause some concern.

Moreover, the more personal the decision choice, the more difficult it may become to make a wise decision over one that will bring some kind of instantaneous happiness. In these types of situations we tend to slip out of objective thinking which keeps us from thinking clearly. Therefore, let’s review the four cornerstones of decision making.

Four major concepts that affect personal and real estate financial decisions are:

  1. Perception (P) ~ experiences, training and education
  2. Information (I) ~ all available financial and non-financial information
  3. sources Judgment (J) ~ the analysis of both perceptual processes and information
  4. sources Decision choices (D) ~ involves selection of the best alternative solution or course of action

Decision making in this model is defined as a multi-stage, information- processing function in which cognitive processes are used to generate a set of outcomes. There have been differences of opinion about how many stages and subroutines within the phases exist and the order in which the stages occur. However, the three stages in the proposed model appear with some consistency in everyday life.

The model is presented in Fig. 1.1. Arrows from one concept to another indicate the assumed causal relationships that can be specified a priori using a decision-making approach. This model has been tested in various contexts including accounting, finance, auditing, military, and business ethics.

The main aspect of the process thinking modeling approach is that knowledge inputs are necessarily embedded in a context representing cognitive, behavioral, individual, and social that constrains their discovery and their usefulness in different problems.

**This is a partial chapter from the book Decision Making for Personal Investment, written by Tim McFarlin and Waymond Rodgers**