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Are you suffering from ‘decision paralysis?’

Anand had a piece of farm land which was acquired by the Government in October, 2010 and as a result he got sizeable money. Last year, when I visited India (during Apr’11) Anand told me about this transaction (i.e. sale of land) and I immediately asked him what his plans are for the money he received. He coolly informed me that the whole amount is lying in his bank since the time it was received.

On hearing this, I was very upset with Anand as by doing so he has already missed some good investment opportunities. Anyhow it is never too late to commence and during my short stay of about 20 days at Delhi, I assisted Anand to place about 30% of the money (which was laying idle in his bank a/c) into different instruments of investment. As investing money is an on-going activity so I advised Anand how to go about it in the days to come.

I was sure that if he follows it religiously he, on one side will be able to diversify the risk and on the other hand will succeed in constructing a portfolio of investments. This time around the moment I landed Delhi, I told Anand to meet me with details of all his investments. For a week I waited as Anand was making one or other excuses to delay our scheduled meeting and I sensed some problem.

Finally, one evening I banged into his house without informing Anand about it. Fortunately he was at home and had no choice but welcome me inside. The moment we settled down, I confronted him with the hard question which Anand was avoiding and thus requested him to bring his investment details. Quite reluctantly, Anand brought a folder which we prepared together the previous year.

My immediate glance over it made me bit unhappy as I did not find any additional investment transactions other than what were made during my previous visit. I was bit annoyed with Anand and he started giving multiple excuses for not following what I had asked him to do. My quick analysis of the situation convinced me that Anand (like many other investors) is suffering from “Decision Paralysis”.

By saying so I am not referring to any particular disease but a particular state of mind which affects our decision making on day-to-day basis. “Decision Paralysis” is a condition of not being able to decide on a matter when there is no clear cut best option. It leads to an ever longer period to gather more information in the hope that more information will guide the decision maker to an option that is clearly better.

This is exactly the same as “Analysis Paralysis” Nowadays, there are so many choices, so many financial products and so many offers. And it’s all bundled with financial jargons, so it becomes really difficult for anyone to understand. Also there is plenty of information available on the web, on the media and on the neighbourhood. This makes decision making process much more complex. All these things coupled with the fear of making a wrong financial decision lead us to decision paralysis.

We don’t take any decision and start postponing it. This is a typical paradox which many human beings are facing in today’s high-tech world. In olden days, people often used to complain that there are very limited choices available and one has to decide within the available options only. Today the situation is just opposite; there exist so many varied options or alternatives that often it becomes difficult to make a choice.

Even if we have to buy a simple tooth-brush there are multiple brands available and we don’t know which one to buy. Similar is the case in personal finance issues, there are so many options available that one is not sure which one to opt for ultimately. So this parasite of “Decision Paralysis” has not affected only my friend Anand but many more people from the investing community, who keep postponing their investment decisions due to one or other reason. This is what indicates to one’s mind set.

The famous saying by Henry Ford conveys it the best way i.e. “whether you think you can or can’t, you are right.” In order to replace old habits through a change in your mindset, there are three steps you must follow: first, begin by specifically identifying the results you want; then create and develop actions that will accomplish those results and lastly, examine your beliefs about those actions to determine if they are holding you back.

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Author: Jagjit Singh

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