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Analysis paralysis: When you experience “choice overload”, several behavioral biases can ensue, including: 1) Inertia: You avoid making decisions. 2) Naive diversification: You spread assets across investments without a clear strategy. And 3) Opting for attention-grabbing investments: You make impulsive decisions based on the media. To help you navigate this choice jungle, three research-backed decision strategies that can be leveraged include:
📌 Align decisions with goals: Keep your financial goals front of mind when you consider making impulsive choices. This can help you focus on long-term objectives.
📌 Structure the decision-making process: When specific deadlines or appointments are set for making decisions, your follow through rate rises.
📌 Limit available options: Focus on a curated selection of investment options or trusted sources of financial information. This simplifies the decision-making process.
You will continue to be inundated with information as technology evolves, but it’s up to you and the responsibility of your financial advisor to cut through the noise. When you heighten the focus on your personal financial situation, you gain clarity on how to make confident financial decisions.