Building a “Not-to-Do” List for Investing: A Way to Reduce Inconsistent Decisions

Discussions of investing usually focus on what to buy. Over the long run, deciding in advance what you will not do can be just as useful. When markets move sharply or friends and social media start talking, people sometimes act in ways they would not choose on a calm day. This article explains how to build and use a “not-to-do” list as a general idea. It does not recommend any product or suggest when to buy or sell.

Why decide what not to do?

Decisions made while calm and decisions made while anxious often differ. Writing personal rules beforehand reduces the number of choices you have to make in the heat of the moment. Think of the checklists used in aviation: the important items are fixed in advance, so nobody has to improvise them under pressure.

Knowing your own tendencies helps you decide what belongs on the list. Common behavioral patterns such as following the crowd or reacting to recent news are covered in our other article on typical investing mistakes (Japanese).

Examples of items

The table below gives sample entries. Which items matter will differ from person to person, so treat it as a starting point.

Phrase each item as something you can clearly either do or not do. “Do not take excessive risks” is vague, while “do not touch the emergency fund” is easy to check afterwards.

Steps for building the list

1. Write down moments when you hesitated or decisions you later questioned. If you have little experience, use general examples of common mistakes.
2. Sort the causes into groups such as money, information, emotion and lack of understanding.
3. For each group, write one sentence describing what you will not do.
4. Keep the list to roughly five to ten items. A long list is hard to follow.
5. Put it somewhere you will actually see it, such as a note on your phone or a sheet of paper.

It helps to clarify your purpose, time horizon and available amount first, so each rule has a reason behind it. To see what monthly amount feels manageable, the dollar-cost averaging calculator on this site (Japanese) at /tools/dca/ lets you try different figures.

Making the list easier to follow

• Use automatic contributions to reduce how often you must decide.
• Define a rule for exceptions in advance, for example sleeping on a decision overnight.
• Share the list with a family member or someone you trust.
• Review the list itself on a set schedule, such as once a year.

Rules that are too strict can make you want to break them. It is usually easier to start with rules you can keep and adjust them as you go.

Limits of the list

A not-to-do list reduces inconsistency; it does not prevent losses. You can follow every rule and still see your assets fall when markets decline. If your circumstances change and you never revisit the rules, the list can also narrow your options unnecessarily. For example, the amount of risk you can bear may differ at a different stage of life. In practice, treat the list as a document you update regularly, not as a fixed commandment.

Here is an example of how a list works in practice. Suppose a day comes when the news suggests markets are moving sharply. If your list contains “do not place orders on days when emotions run high,” you can simply do nothing that day and compare your situation with your records on the following days before deciding. Adding one line to each item explaining why you chose it makes the list easier to accept when you reread it, and it makes casual exceptions harder to justify.

It also helps to decide in advance what happens when you break a rule. Record the fact and add a short note on the cause, such as being tired or being swayed by information. The point is not to blame yourself but to gather material for deciding which item to adjust. If the same item keeps being broken, the rule may not fit your real life.

Finally, remember that a list is only as good as the thinking behind it. Items copied from someone else’s checklist may not match your own money, time horizon or temperament. Spending a little time on why each rule exists is what turns a list of slogans into a working tool, and it keeps the list short enough to remember without looking at it every day.

A list can be short. If you actually keep three or four items, that is already a worthwhile step. People often find that the first version feels too strict or too loose, and that is normal. Treat the first month as a trial: note which rules were easy to follow, which were ignored and which situations the list did not cover. Then adjust the wording so each rule is something you can verify with a simple yes or no. Over several revisions the list usually becomes shorter, clearer and more closely matched to how you really behave, which is exactly what makes it useful.

Points to consider and risks

• The list is an aid for consistent decisions. It does not avoid losses or generate returns.
• Even if you follow your rules, investments can lose value because of market movements.
• Too many or too strict rules tend to be ignored and become a formality.
• If not reviewed as your life changes, the rules may stop fitting your situation.
• Do not copy someone else’s list as is. Start from your own purpose, time horizon and tolerance for loss.

This article is general information and not personalized advice. For how we handle content, see our editorial policy and disclaimer.

About this article: This is a basic guide article. Our policy is to check the content against public sources. It is not investment advice. If you notice an error, please contact us.