Behaviour
The difference between a plan and an intention
An intention is something you mean to do. A plan specifies what happens, when, and what triggers it. Only one of them survives contact with a falling market.
Most explanations of plans versus intentions stop at the point where it starts to matter. This one carries on.
The short version
- Intentions specify a goal; plans specify the conditions and the action.
- Plans linking a situation to a response have generally been found more effective than goals alone.
- The value comes from removing the need to decide in the moment.
An intention has no trigger
"I will hold through the next fall" states a goal without saying what will actually happen or when. When the fall arrives, the intention has to be converted into a decision under stress, which is where it fails. A plan states the condition and the response: if the portfolio falls, I continue the standing order and rebalance in March.
The difference is not wording; it is whether a decision remains to be made.
Why linking situation to action works
Research on goal pursuit has generally found that specifying when, where and how something will be done improves follow-through compared with intention alone. The mechanism is that the situation itself cues the action, rather than the action depending on recalling a resolution. The effect has been observed across many domains, though effect sizes vary and some studies find it weaker than the popular account suggests.
For investing the application is straightforward: write the conditions before they occur.
Specify the responses that matter
Three conditions cover most of it: a large fall, a large rise, and money being needed sooner than expected. For each, write the action, which for the first two is usually to continue and rebalance to target. The third is the one people never write and the one that most often forces a bad sale.
Naming the third in advance is what allows a cash buffer to be built before it is needed.
Intentions drift silently
Because an intention exists only in your head, it can be revised without you noticing the revision. After a revision, the new intention feels like it was always the plan, which removes any sense of having broken one. A written plan makes the revision visible and requires a reason, which is most of its protective value.
Where it helps most, the paper is not magic; the visibility of change is.
Distinguish the plan from a forecast
A plan states what you will do under conditions, not what conditions will occur. Plans that depend on predicting markets are forecasts wearing a plan costume and fail when the forecast does. The test is whether every branch of your plan is something you control.
On an ordinary week, contributions, allocation targets, review dates and sell criteria all pass; market direction does not.
Keep it short enough to use
A plan that runs to many pages will not be read during the ten minutes when it matters. One page, dated, with the fall clause near the top, is a design for the actual moment of use. Store it where you can find it from a phone, since that is where the panic will occur.
Anything specific to your circumstances or tax position should be checked with a regulated adviser locally rather than settled in the document.
The takeaway
Write "if this happens, I do that". An intention without a trigger is a hope.
The version you keep doing is the version that works.
Questions readers ask
Is a mental plan good enough?
It is better than nothing and much weaker than a written one, mainly because it can be revised silently at the moment it is being tested.
What if my plan turns out to be wrong?
Change it at a scheduled review, with a stated reason, in calm conditions. The prohibition is on changing it in response to market movement.
