Investor Inertia: What You Can Do About It

​In-er-tia, a tendency to do nothing or remain unchanged. (The Oxford Dictionary)

“There is no time like the present.”
“Just do it”
“Never put off til tomorrow, what you can do today”

Procrastination, the bane of our existence.  Yes, there are more serious things to worry about, but your financial health is pretty important. In our chairs we see a great deal of financial/investor inertia.  

What causes financial inertia? 

---

What causes financial inertia? 

Money can trigger intense emotions.   Here are a few we have encountered along the way. 

• Fear-I don’t know what to do and I am afraid of making a poor decision  
• Stress- Financial decisions make me anxious
• Overwhelmed- I have too much on my plate
• Distracted- I have so many other things to do
• Shame-  Waiting too long and embarrassed  (truly, I am not a procrastinator!)

As if these reasons weren't enough to paralyze decision-making, science confirms that people do not like to do tasks involving multiple decisions in situations where they are less confident.  For instance, let’s say you have multiple 401K, 403b or IRA accounts scattered at multiple institutions.  This is not unusual.  You know, deep in your heart, that it is not an efficient thing to do for many reasons, including

• Lack of a cohesive investment strategy
• Hit-or-miss asset allocation, overlapping asset classes, or missing asset classes
• Lack of rebalancing
• Whether the beneficiary designation is correct

This list involves multiple decisions.  Where to consolidate?  What to do once they are consolidated? What is the optimal asset allocation for me considering current capital markets and my longer-term goals?  When is it time to rebalance?  Who are my beneficiaries and has anything changed? Even, what are my passwords for the multiple financial sites?

How to get "unstuck"

We know that delegating financial obligations is the smart decision when you find yourself struggling with the quicksand stickiness of inertia. In fact, It is typically the reason why women and men select a financial advisor with whom to work.  Delegating to a good financial advisor helps people establish a disciplined process for addressing the myriad of financial details that occur over a lifetime.  

 In the meantime, use these guideposts to keep it simple:
 
1.  Always use the same form of your name on legal and financial documents. For instance, Susan B. Anthony instead of Susan Anthony or SB Anthony or Sue Anthony.  It makes it more difficult to clean things up when there are variations on a name.  

2.  Limit the number of accounts and institutions.  Sometimes bankers encourage multiple accounts when they are not necessary.  The fewer accounts and institutions, the less there is to keep track of.

3.  Don’t over-diversify.  Contrary to popular belief, it is not always efficient.  In addition, people hold on to losing positions for too long.  They lack the emotional will to sell.   

4.  Get your estate documents in order, especially if you have minor children.  It is not fair to them that your state gets to choose their guardian!

5. Make sure beneficiary designations are current.

At Mosaic Fi, we help our clients with all of these tasks and more, leaving you with more time to do other important things.   Let us know how we can be helpful to you and your family.