Delaying Investing or Delaying Reaching Your Goals?
Shruti Sharma -
Sep 22, 2022
Due to market volatility, you could be unclear of whether to invest or wait for next market corrections. However, delaying your investment until the market is at its best could mean missing both your deadline for accomplishing your goals and market opportunities.
Why do prospective investors delay?
Here are a few reasons why we face the investing inertia problem.
• Procrastinating: We all have a similar starting trouble. Let it be investing or going to the gym. This issue exists everywhere. We frequently put off making investment decisions. The first hurdle can be attributed to a number of factors, like having too many options to pick from or being afraid of choosing incorrectly.
• Choice overload: With so many investment options available, it makes sense that choosing the one that best suits you can be confusing. The number of investment possibilities is always increasing, making it challenging to select a few. People decide against making a choice and leave their money sitting in a bank, justifiably believing that they are generating interest and that their money is not depreciating. However, because inflation is consuming most or all of your money, its worth is only nominally increasing.
• Too many calculations: Do you fear mathematics? In general, we are. It can be difficult to calculate how much money we could need for retirement or for our children's education while also accounting for inflation, risk, and market returns.
• Fear of making the wrong decision: When we are afraid of making the wrong decision, we frequently end up doing nothing. When it comes to our investments, we firmly think that "Known devil is better than unknown angel." As a result, we wind up keeping our money in banks where we receive very little interest even if it has much greater potential to generate higher returns.
• Trying to time the market is another reason. Any financial asset we decide to add to or remove from our portfolio should be purchased or sold at the correct price. We merely wait and don't make any calls out of fear that we will make the wrong decision. However, timing the market is an impossible task.
Delayed investing affect wealth creation. How?
Time is a metaphor for the Power of Compounding in the world of investments. It suggests that our savings have the potential to increase enormously when invested. Even while it may start out slowly, the returns soon pick up and become uncontrollable. Any investor would be motivated to act immediately if the cost of waiting even a month to make an investment choice were to be considered. So why do we put off making decisions about our investments when we stand to lose so much? Until we actually feel the power of compounding, it is impossible to fully comprehend it. By that time, it is also impossible to make up for lost time.
We cannot fully comprehend the power of compounding before experiencing it, and by the time we do, it might be too late to make up for lost time.
The rush we have when we finally start investing is another drawback of delaying purchases. We make hasty decisions that can cost us dearly in an effort to make up for lost time and money. Instead, it is wise to seek the advice of a financial specialist while investing.
How can one overcome it?
There are certainly ways to overcome investing inertia problem.
• Conduct some basic research: There is a wealth of information on the internet about the various investment options on the market. All you need to do is investigate them to learn more about them. People exaggerate the importance of making the correct product, timing, and strategy investments. Simply conducting a simple investigation about the goods and the issuer will suffice.
• Start investing in mutual funds: Create a Systematic Investment Plan as a smart tactic to overcome any obstacles to investing (SIP). In addition to saving you the hassle of trying to time the market, a SIP also has affordable costs. You may continue to be focused and disciplined while growing your savings with a SIP. The SIP is designed to help us average out the cost of investing through recurring investments while also ensuring that we don't miss out on profitable opportunities when the market is favourable. Additionally, you have the option of STP (Systematic Transfer Plan) for lump sum investments.
• Take help for things you do not want to do: When you don't know anything about investing, figuring out how much, where, and how to invest might be a little laborious. Financial consultants might be of assistance to you in this situation. As a result of recent technical breakthroughs, numerous online venues have emerged. They take care of everything while leaving no paper trail. Let them handle the math so you can sit back and unwind.
Even Sir Isaac Newton probably didn't realise that one of his laws might be used to apply to investments and investors. Keep your funds active by breaking out of your lethargy and not letting them remain idle.