173 Three Mental Models for making better decisions
I want to help my clients make the best possible decisions about their financial future, so over the years I’ve done a lot of research into how to make smart decisions. I’d like to share some of the insight I’ve gathered in this podcast. The topic of decision making is vast, so I’m going to focus on one specific set of tools which I feel are incredibly powerful – that’s Mental Models. I first came across Mental Models from Warren Buffet and Charlie Munger of Berkshire Hathaway fame. I share a story of Charlie using one of the models I share in this episode as far back as 1943, that of Inversion. The pair are renowned for using Mental Models to inform their decisions about which companies to invest in. Mental Models are powerful tools that can help us make better decisions and navigate complex situations, as they provide a framework for understanding the world around us. In this episode Kathy and I share three models: Inversion, Backcasting and Compounding, and how you can apply them to the decisions you make everyday.