I know a very intelligent person who is a Finance professional. He saves well but rarely invests because he feels his decision can go wrong. He knows the concept of ‘Risk Management’ but does not apply it regularly. Like this gentlemen, we come across a lot of people do not become rich because of their reluctance to decide and act.
In my blog, 'Reducing the time lag between saving and investing in Personal Finance', I discussed the importance of action in investing. I realise that we need to address the process of decision making itself in our journey of becoming Rich.
The reason many delay their decision making is that they, consciously or subconsciously, are scared of their decision going wrong. This is an interesting irony; people are willing to cross really busy roads which pose risk to their lives but are unwilling to take decision on a few thousand rupees. Does it mean that their lives are less valuable? You know the answer. So unless one is pushed to decision making, inaction seems the way. Let us look at a few suggestions to overcome such impasses a little later.
Let us discuss a few vital areas, which require decision making, in the journey of becoming rich:
- How much to save every month?
- Should I follow the need analysis of expenses or not?
- What kind of education I need to invest in?
- How to identify various avenues of investment?
- How to identify the risks involved and the Risk Management tools?
- Should I be an investor or a trader in the Stock Market?
- What kind of time horizon I need to have for my investments?
The above list only illustrative and there can be a lot more areas calling for decision making. Indecision is certainly not a virtue in Personal Finance. At Happy Mentor, we have a few suggestions for people who are indecisive:
- Read books like, ‘Psycho cybernetics’ by Dr. Maxwell Maltz. Such books will make one realise that step in the wrong direction is better than staying at the same place all the time.
- Keep investing about 1% of your income on financial education. Read books, listen to audios and attend programs.
- Appoint a Financial Planner to work out your Financial Plan with the full involvement of your family.
- Have a Financial Mentor, with whom you can discuss your actions and inactions at least on a monthly basis.
- Associate with a few positive people who can encourage you even if some of your decisions go wrong.
Enough of the serious stuff!! Let us enjoy this incident about decision making: A couple, living in a country with a very high rate of divorce and remarriage, celebrated their fiftieth wedding day. One of their friends asked him, "what is the real secret of your long marriage?" The man replied, "At home, I take all major decisions and allow my wife to take all my minor decisions." The friend could not understand this fully and again queried, "What do you mean by minor decisions and major decisions?" The man told him happily, "Minor decisions include which city to live in, what should be the size of investment in the house, how much to invest in the Stock Market, which school or college our children should study. Major decisions include how our Government should manage inflation and unemployment, what should be our foreign policies with respect to developing countries, whether to preserve our oil reserves or exploit."
So if we go by the above little incident, our entire decision making will be minor and let us take them in time to be Rich!!
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