Are you wearing blades that can spoil your financial decisions?

Attend a horse race—maybe in Santa Anita, Kinland, or Churchill Downs—and you’ll see some horses in bulletproof vests galloping down the track.

These blinders keep horses focused on what’s in front of them, allowing them to ignore anything that might distract them from their primary goal – to cross the finish line before other horses.

One thing I’ve learned over my decades as a financial professional is that investors sometimes wear blinders. Unfortunately, this is not as good for them as it is for horses that attract cheers as they run along the final stretch.

In the case of investors, blinders that obstruct the view of the broader picture can be costly. Here’s what I mean: Sometimes people see something in the news and become so focused on the fallout – or the perceived fallout – of that one issue, that they make reckless investment decisions as a result. They are blind to everything else. For now, the war in Ukraine may be the issue driving investors to wear blinders. or inflation. or the supply chain. or COVID.

But six months from now, a year from now – and certainly at some point – these issues will fade away and a whole new batch will emerge. And for many people, it will be the same again when they focus on an event and allow it to affect their judgment and investment strategy.

When it comes to your financial plan, it is important to demystify this ambiguity so that you remain disciplined and make decisions based on reason rather than emotion. This does not mean that you never make adjustments to your investment strategy. But it does mean that you consider these changes carefully.

To stay disciplined and stay on track, here are seven areas you should address regularly:

1. Risk: Take the right amount

Are you risking too much, putting your life savings in a precarious situation? Or are you taking a little risk, and missing out on opportunities to grow your portfolio? It is important to assess how much risk you are taking with your investments and whether it is appropriate for your age, needs and goals.

2. Taxes: Think ahead

Are your investments creating additional tax liabilities for you unnecessarily? And what might future tax rates be when you start withdrawing money from your retirement accounts? People often assume that their tax rates will fall when they retire, but that’s not necessarily the case. Also, if a significant portion of your retirement savings is in tax-deferred accounts, you’ll pay taxes at retirement whenever you withdraw, and that can add up. (We’ll discuss shortly at least one thing you can do to make an edit there.)

3. Fees: Know what you pay

Financial professionals make their money through fees or commissions, and there is nothing wrong with that. But you should know exactly how much they charge you and why. Often times people don’t realize how much they are charged – or even that they are charged at all. It’s hard to make wise financial decisions if you don’t know all the variables in the game, so ask about the fees associated with your investments.

4. Conversion of Ruth: One might be right for you

Are you a candidate for a Roth conversion? As mentioned earlier, many people’s money is hidden in tax-deferred accounts, such as a traditional IRA or 401(k). When you start withdrawing money from those accounts in retirement, you’ll pay taxes on the withdrawals. Once you reach the age of 72, you have to withdraw a certain percentage each year whether you need to or not. But if you start converting these into Roth accounts, your money will grow tax-free and your withdrawals won’t be taxed, as long as you follow the rules. You pay taxes while making the transfer, but at current tax rates, which may be lower than future tax rates.

5. Income planning: do not rely on social security alone

Many retirees worry about running out of money, so it’s a good idea to create an income structure to help you avoid this. Social Security will provide a portion of that income, but not enough for a living. Many people no longer have pensions, so other options for generating this income should be explored. An annuity can be an option, but it’s not for everyone. Bonds, CDs, and dividend-paying stocks are among other alternatives. This is where a finance professional can help you determine what is best for you and your circumstances.

6. Long-term care: explore your options now

As we live longer, long-term care will be a reality for many Americans. And it can be expensive. The average cost for a semi-private room in a nursing home is about $7,900 per month, and a living facility costs about $4,500 per month, according to the Genworth Cost of Care Survey. If you find yourself or a loved one in need of care, how will you pay for it? Medical insurance does not cover long-term care and Medicare has significant restrictions on what it pays for. One option is long-term care insurance, which can be expensive. Some life insurance policies have passengers that they allow for use in long-term care. Medicaid also pays for long-term care, but this is only for people who have few or no assets. It’s a good idea to develop your plan to pay for long-term care long before you actually need the care.

7. Transferring Wealth: Define your giving goals

Many people like to leave something to their heirs or a favorite charity after they are gone, but it is important to do so in a tax-efficient manner. There are a number of ways to do this. As just one example, anyone can inherit a tax-exempt Roth IRA, but this is not the case with a tax-deferred IRA. Another example: give some assets to your heirs as a gift while you are still alive. The IRS allows you to file up to $16,000 annually per person without taxation.

By looking at these seven factors, you can become a more disciplined investor and not be held back by blinders. Because there’s one more thing my experience has taught me: Markets punish those who give unexpected reactions but reward those who remain disciplined.

Ronnie Blair contributed to this article.