Fear of Decision Making

Posted By: Admin

It has been over  a few months since the Vaccine has been out and the Govt has been putting out messages that senior citizens esp those above 60 years and younger people with Comorbidities  can now get their Vaccine shots at the nearest health centre. 

I met a dear friend who had been worried sick of contracting  Covid during the past year.. and rightfully so, I was too.This friend was so scared that he has hardly stepped out from his home during the past year.. done no travel ( he used to travel about 10-15 days a month , pre covid) . I asked him If he had taken the shots and he replied that he was waiting for more evidence that it would not do him any more harm before he got himself vaccinated. He had no better cure from Covid and he was vulnerable, yet he was waiting based on some whatsapp rumours rather than eliminate the risk by getting himself inoculated. This friend suffers from what I call the Fear of Decision Making. 

I invested in the stock markets before March 2020 and then the fall of stock markets in March wiped my portfolio down by almost 40 -50 %, I exited at that time in a loss vowing never to invest in stocks. However lately watching the markets make a comeback, I am unable to decide if I want to invest or do I want to stay away. 

Many a time, making a decision and following it with the relevant action involves effort while maintaining status quo or practicing inertia needs no effort. So most people find it easier to do the later rather than the former. 

Keeping money in the savings bank account is easier than deciding to invest it in a particular option. Even though the returns are lower, at least it cannot be a loss is the normal rationalization. 

How Flawed is that argument ?

With inflation of 5% and saving bank account return of 3%, your money is losing about 2% per annum just lying in a savings account, over the next 10 years you would be able to buy only 90% of what you can afford now. So is inertia really the good option ?

Most times, not taking a decision is not an option. It is just a lazy alternative and a poor one at that. The ways to overcome is , 

  1. Understand all the alternative possibilities based on the decision that you need to make ;
  2. Imagine the worst possible outcome post your decision ;
  3. Now figure how you can take care of such a scenario, 

and then implement the decision. Am sure that your decision may not always be right but they will always be better than waiting for an appropriate time in the future.  

Finally remember that  you don’t need to get all your decisions right, you just need to get enough of your financial bets right, as compared to the  wrong ones so that you make money. Also the learnings from the wrong decisions will propel you to make better decisions constantly.

So don’t keep worrying about sensex at 52,000 points, look at ways you want to participate in this market, you will find you can do it in multiple ways like lumpsum, Systematic Investment Plan (sip) or systematic transfer Plan (STP).. it is all about asking yourself the right question ? 

Do you want to take decisions that are oriented to creating wealth for yourself ? 

Babu Krishnamoorthy

Chief Sherpa, Finsherpa

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