Circle of Competence

The Circle of Competence refers to the areas where a person has sufficient knowledge and understanding to make informed decisions. Outside this circle, their judgment may be less reliable. It’s important to recognize one's strengths and limitations, focusing on what you know well while acknowledging what you don’t. By staying within your circle, you can make smarter choices and minimize risks, especially in areas like investing or business decisions. Expanding this circle involves learning and gaining experience, but it’s crucial to respect its boundaries to avoid overestimating your abilities.