Why a little action might be better than nothing
“Learning to choose is hard. Learning to choose well is harder. And learning to choose well in a world of unlimited possibilities is harder still, perhaps too hard.” - Barry Schwartz
How difficult is it to choose something from the menu in a restaurant? If you’re like me and love eating out, then it can be very challenging. Thankfully, when I looked into this, I found that it wasn’t just an abnormality on my part, but rather an actual psychological theory. Let me explain.
When presented with page after page of delicious cuisine, our brains can sometimes suffer from something called ‘choice overload’. With so many options, there’s increasing pressure on you to make the ‘correct’ decision that will satisfy your cravings.
This is derived from a psychological concept called the Paradox of Choice - the more options available to you, the more likely you’ll become stressed during the decision-making process.
Putting this into context, you’ll discover that it’s applicable to all aspects of your life, especially investing. Say for example your objective is to generate wealth by making better use of your savings. What would be the best strategy for achieving your aspirations?
Investing in stocks and shares, unit trusts, property, cash, gold? The list can be endless.
Inevitably, many of us will choose the safe option by taking no action at all. This is natural, but here’s the most fascinating part of the paradox of choice …
The biggest regrets occur when people choose to take no action at all
When I first read this, I was taken aback a bit, but the more I think about it, the truer I think it is.
How often have you heard people regret the times they’ve chosen inaction over action? Of course, it’s not always a good idea to pull the trigger for the sake of it but making the decision not to do anything still carries its own risks.
Why? Because every day we are presented with endless opportunities that will allow us to progress closer to our aspirations. If we don’t at least try something, we could end up feeling worse than simply sitting tight.
How Covid-19 has changed the landscape
Can you believe that it’s been seven months since the start of the pandemic? Unfortunately, it doesn’t look like we’ll get back to our ‘usual’ way of living anytime soon.
Despite this disappointing reality, the future offers endless possibilities for those who choose to view the situation optimistically. But many have succumbed to this period of limbo by choosing to wait, preferring to sit tight until the pandemic passes and effectively putting their life on hold. This is understandably going to be stressful, particularly as we don’t know how long this period will last for.
Consider the alternative: looking at what we have and making the best of a bad situation. Even though it seems as if our best laid plans now have little hope of being fulfilled, we do have options, it’s just that the context is different.
We may not be able to lie on a tropical beach, but we might discover hidden gems situated closer to home. If we think of it as an opportunity to rewrite the script for a bit, then we can see how action while being in limbo might still be possible.
And with fewer choices, decisions might, for once, be easier to make
Without having the whole globe to travel, we just have the British Isles. Without being able to socialise widely, we now spend time with a select few. Without hundreds of restaurants to visit, we mainly have takeaways.
Yes, many of our options are limited, but this is not the case when it comes to investing. In fact, there are so many investment opportunities available to you that it can be difficult knowing which ones are right. I believe the only way around this is to speak to a qualified financial planner. Having one by your side will help you to make the right decisions by narrowing them down for you on your behalf.
So how do they do this? By getting to know you first, by finding out what matters to you, and by using their expertise and knowledge of the market to help you to reach your financial aspirations.
I know first hand that my financial advice has helped my clients feel less overwhelmed and more confident in their decision making by narrowing down the number of options available and making them specific to them.
A bit like when I end up asking the waiter what he’d recommend to go with the steak. I’d be there forever and a day otherwise, wondering whether I was making the right decision or about to ruin the entire meal with the wrong move.
I’m not saying it’s as easy to make investment decisions as choosing the right Domaine Leroy Chambertin Grand Cru (1990), but it certainly helps to have someone to refer to; someone who can remove the noise and make it easier to do something rather than nothing.
If you’re feeling a bit overwhelmed yourself or have any questions or concerns about your finances, then please book a no obligation ‘ask me anything’ chat and we can talk it through.