WITS stands for “Wallet in the Sock.”
It is also my financial planning philosophy that I describe in my book – A Wallet in the Sock – Lessons in Personal Finance from Me, My Dad and Enron.
In the book, I take a personal anecdote involving my dad’s unorthodox vacation planning techniques and turn it into a powerful metaphor for achieving financial security and peace of mind.
My WITS approach to personal financial management has been shaped by my education, work and life experiences.
Some basic tenets of WITS include:
While there are many rules-of-thumb, personal financial planning is personal. Each household has its own unique goals and objectives.
Take risks that are not only consistent with your financial objectives, but also have an expected return that adequately compensates you for the risk being taken.
Understand the upside and downside scenarios of any investment. If the downside is not an acceptable outcome, don’t do it!
A sound financial position gives you the flexibility to evaluate and take advantage of opportunities if and when they arise.
Consistency of returns, while limiting portfolio volatility, is preferable to large gains followed by large losses.
Since tax rates and government policies are uncertain, be balanced with regard to long term planning and retirement savings vehicles.