Does Investing Inertia Have You Trapped?
Investors are prone to many behavioral mistakes that can cost them dearly. Trying to time the market, trying to pick the winners, chasing returns, trying to go it alone are among the most common. But the one that can inflict the most damage over a period of time is when they succumb to investing inertia. What is investing inertia? In physics, inertia refers to an object’s “amount of resistance to change in velocity.” Without some other force to affect it, an object will not change course or speed. If at rest, it will remain at rest; if plodding along in a straight line – it will continue to plod along. In a nutshell, inertia is the enemy of change. In personal finance, it’s is a psychological affliction that can prevent people from making critical financial decisions often resulting in lost opportunities or financial stagnation.