Unlocking the Mystery of Inaction in Financial Decisions: When Knowing Isn't Enough...

Hello Money Mavens,

A mentor of mine once asked, “Five cats were on the fence, and three decided to jump off; how many are left?”. He mentioned most people will try to turn it into a math problem. It’s a trick question, though. The answer is five are left because the others in question simply decided to hop down. They didn’t actually do it.

Have you ever found yourself in front of what seems to be a golden financial opportunity, and yet, inexplicably, you just... froze? You're not alone. Many of us struggle with decision-making, especially when it comes to finances. Today, we're diving deep into why someone might hold back from making a seemingly "no-brainer" financial decision and what can be done about it.

1. The Fear of the Unknown:?

Sometimes, opportunities seem too good to be true. Even if all signs indicate a decision being a surefire win, the looming dread of unforeseen circumstances or details can paralyze us.

True story, bruh. There once was a guy named Ron Wayne who worked for Atari and sold back his 10% advisory shares in a newly formed startup company. He helped a couple of awkward techy guys named Steve start the company. He sold his shares back for $800 to his co-founders only two months after forming the company. Those guys turned out to be Steve Jobs and Steve Wozniak. Imagine owning ten percent of Apple today.

???What to do? Always do your own research. Dive deep into the specifics, and only when you feel informed, take the next step.

2. Embarrassment or Knowledge Gaps:?

It's not uncommon for individuals to shy away from opportunities they don't fully understand, fearing embarrassment or mistakes.

???What to do? Education is key. Don't be afraid to ask questions, attend seminars, or seek out experts in the field. Remember, every expert was once a beginner. You don’t have to shut the door if you still have questions or need something explained on a more basic level.

3. The Waiting Game:?

The allure of quick returns can overshadow opportunities that promise steady, long-term growth. If presented with the ability to accomplish financial goals systematically over time while reducing risk, it’s wise to play the long game if you can afford it.

???What to do? Patience is a virtue, especially in finance. Consider the long-term benefits and keep your eye on the bigger picture.

4. Too Many Cooks in the Kitchen:?

When making decisions, it's natural to seek advice. However, getting caught up in a cacophony of opinions, especially from biased sources or those without expertise, can be overwhelming.

This can be very detrimental when it comes to the mesmerizing possibilities of influence. Google anything online, you will see some people love it some people hate it. There are a lot of strong opinions out there, but the only one that matters is yours.

Facebook investing or retirement saving groups have a bias. A lot of times, they sheepishly follow what they think their talking head hero would do—the same path for everyone. Imagine going to a doctor who gives every new patient the same diagnosis. But drop into one of these online groups, watch somebody offer an alternative approach, and watch them get dragged in the comments, even if it was suitable information for the topic—herd mentality.

“I have to ask my advisor about this decision.” Advisors are paid by how much money is under management. You move money, it’s fewer assets under management (less income) for them, so how is that not a conflict of interest? They might say, “You could make more money with me,” but conveniently leave out that you can also lose more with them.

Other family members, friends, coworkers, and personal acquaintances can muddy the water just as bad. People love chiming in about things if given the opportunity, and let’s be honest, sometimes they insert their opinion without being asked on topics such as sports, food, politics, or music—no difference in personal finance. Unfortunately, depending on how passionate, the conviction might be enough to dissuade someone from forming their own opinion.

???What to do? Consider the motivations and knowledge base of those giving advice, and prioritize expert, unbiased counsel. In the end, you are the one who lives with the consequences of the decision, whether good or bad.

Let’s Compare Some Scenarios:

1. Healthy Choices:?

Knowing: We all know that eating healthy and exercising is the right choice.

Doing: Yet, the convenience of fast food or the comfort of the couch often wins. The solution? Educate oneself about the tangible benefits of a healthy lifestyle, and then create an actionable plan to incorporate those habits.

2. Career Advancements:?

Knowing: An opportunity for a promotion arises, and you know you'd excel in the role.

Doing: Despite the clear benefits, the fear of increased responsibility or potential failure might hold you back. The answer? Talk to mentors, undergo further training, and believe in your own abilities.

3. Retirement Income Planning:?

Knowing: There are no guarantees in the stock market.

Doing: Find ways to guarantee yourself retirement income above and beyond social security and shield yourself from as many fees and taxes as possible.

In conclusion, understanding our psychological barriers can be the first step in moving towards proactive financial decision-making. Embrace continuous learning, seek expert advice, and trust in your capacity to grow and adapt. Remember, seizing a golden opportunity is not just about recognizing it but also having the courage and preparedness to grab it.

Warm regards,

Chris Kaden

P.S. I want to give a shout-out to my friend Andrea Correa. Go follow her on Instagram for posts about how she keeps healthy eating simple. Over the last ten or so years, she has dedicated herself to inspiring others to live a healthier life. This is not a paid plug. I share because I know her personally, but I also believe that healthy eating and exercise are some of the best ways to invest in oneself. Instagram.com/andrealcorrea