Some years ago, the scientist Edward Fredkin identified a quirk of human behavior.

When it comes to making decisions, Fredkin found, we tend to allocate our time inefficiently. Suppose, for example, you’re at the grocery store, looking for something basic like paper towels. In a big supermarket, there might be a dozen or more choices. The result: Because there are so many options, it can be hard to choose among them. In the absence of big differences, Fredkin observed, we tend to get bogged down by the details and spend an inordinate amount of time over-analyzing small differences.

In Fredkin’s view, there’s nothing wrong with being a careful consumer. If it takes just a minute to calculate which brand of paper towels is the better deal, there’s nothing wrong with that.

The larger concern, in Fredkin’s view, is how consumers approach bigger, more consequential decisions, where the outcome can have a material impact. Because these larger questions are harder to answer—and thus require more mental energy—Fredkin found that people tend to spend less time than they should on them. In many cases, for example, we might procrastinate on a decision because it’s complicated or feels like a black box.

That’s Fredkin’s paradox: We tend to spend less time on decisions that can really move the needle and more time on relatively minor questions where the result won’t make much of a difference either way.

Fredkin’s paradox presents itself frequently in personal finance. Suppose, for example, you’re selecting investments for your portfolio and trying to decide whether Fidelity’s new zero-fee mutual funds would be a good choice.

To help decide, you could compare the performance of these funds to comparable funds from Vanguard, which offers funds that are very low-cost but not entirely free.

Here’s what you’d find: Over the past five years, Fidelity’s zero-cost total-market fund (ticker: FZROX) has beaten its closest Vanguard competitor (ticker: VTSAX) by about two percentage points. That would seem to make sense. If two funds are essentially the same, but one carries a fee and the other doesn’t, it stands to reason that the no-fee fund would come out ahead. But that’s just one fund.

If you look at another of these no-fee funds, you’ll see precisely the opposite result. Over the past five years, Vanguard’s S&P 500 fund (ticker: VFIAX) has beaten Fidelity’s zero-cost equivalent by a few points.

What, then, should an investor conclude about these zero-fee funds? Based on the data, there’s no clear conclusion. And that’s where Fredkin’s paradox kicks in. Without a clear answer, a smart consumer would be inclined to continue researching the question, looking for some difference that might tip the scales.

That seems logical. But what Fredkin would tell us is that it simply isn’t worth the effort. Ultimately, the cost difference among all these funds is insignificant, and thus, the results are likely to be almost identical. Informal as it might sound, we should simply choose one and move on. That would free up time to spend on bigger-picture decisions which are likely to make more of a difference.

As the end of the year approaches, here are a dozen such questions that may be worth your time:

1. Because it can be complicated, health insurance is an area that’s definitely susceptible to Fredkin’s paradox. But with the annual open enrollment period approaching, it’s worth reviewing the options. The savings could easily be in the thousands.
2. Mortgage rates have been elevated for more than three years, but they’ve ticked down in recent months. If the rate on your mortgage is north of 6.5%, it’s worth looking into a refinance. The good thing about refinancing is that it’s a straightforward, mathematical decision. It just requires a lot of paperwork, and that can be a deterrent. My rule of thumb: If the lower rate will offset the fees associated with the refinance within 12 months, then I think it’s worth the effort. With refinancing, you can always revisit it again if rates drop further.
3. Similarly, if you have other loans outstanding, it can be invaluable to shop around.
4. Do you own any actively-managed mutual funds? If they’re in a taxable account, they could be quietly adding to your tax bill. To see if that’s the case, navigate to Schedule D of your 2024 tax return and look for the line that reads “capital gain distributions.” If there’s a meaningful number on that line, find out which funds are driving these gains and ask whether it might make sense to sell them before the next round of distributions, which are typically near year-end.
5. If you’re in your working years, it’s usually safe to assume that your tax rate in retirement will be lower than it is during your peak earning years. If cash flow permits, try to contribute the maximum to a pre-tax account, such as a 401(k) or 403(b). Even if you’re self-employed, there are plenty of easy retirement accounts you can set up for yourself, such as a solo 401(k) or SEP IRA.
6. Does your employer offer other tax-advantaged accounts, such as a health savings account (HSA) or flexible spending account (FSA)? They carry limitations but are worth considering.
7. If you’re in retirement, it’s worth reviewing your strategy for drawing funds out of your retirement accounts. The biggest mistake I see: not taking advantage of the window between retirement and age 73 or 75, when required minimum distributions begin. If your tax rate is very low during these years—especially if you’re in the 10% or 12% bracket—it’s worth considering additional IRA distributions, ideally in the form of Roth conversions.
8. Checking your homeowner’s and auto insurance policies might sound about as interesting as watching paint dry, but they’re worth checking. Be sure that your coverage levels are still sufficient, especially on the liability side, and make sure you have umbrella coverage. If you have jewelry like an engagement ring, be sure it’s scheduled separately. Finally, ask what discounts your insurer offers. Some will knock off close to 10% if you pay in full for the year. If you have teenage drivers, good grades could earn a small discount as well.
9. Are you a homeowner? Cities and towns don’t advertise this fact, but real estate tax assessments can be appealed and negotiated. If you have a basis for arguing that your assessment is out of line with comparable homes in your area, there are attorneys who specialize in preparing these appeals, and they typically work on a contingency fee basis.
10. Be sure that the beneficiaries on your retirement accounts and life insurance policies are in line with your current wishes.
11. Especially if you are single, make sure you have a trusted contact on file with your broker. This gives them someone to reach out to if they have concerns about your wellbeing.
12. Is your estate plan current? While the federal estate tax exclusion is now quite high, at $15 million per person ($30 million for a couple), many states have their own estate taxes with much lower limits. Especially if you’ve moved recently, it’s worth reviewing the structure of your plan to be sure you don’t inadvertently end up paying too much.