How to overcome “analysis paralysis” as an investor in the digital age

As an investor, you may find the wealth of information at your fingertips to be overwhelming. Here’s how to overcome “analysis paralysis” in the digital age.

As you continue to build your investment portfolio, you might encounter roadblocks that knock your confidence. These barriers can be financial, emotional, or mental; as we discussed in a previous article, investing is not just a financial journey, but an emotional one too.

One little-discussed issue many investors face is “analysis paralysis”. This phenomenon describes a lack of action taken by investors due to them feeling entirely overwhelmed by all the information, and choices, at their fingertips.

Indeed, with the average adult spending 75% of our waking hours looking at screen according to the Manchester Evening News, the amount of information our minds are exposed to on a daily basis is somewhat baffling.

Perhaps as a result of this deluge of information, overthinking has become a common issue in the digital age. Research published by Huffington Post found that 52% of those aged between 45 and 55 say they overthink, with the number increasing to 73% among 25 to 35-year-olds.

Crucially, when you invest, overthinking can lead to analysis paralysis. This feeling can inflict financial consequences on your portfolio long-term – so understanding how to overcome it is essential as a modern investor.

Read on to find out how investors can overcome analysis paralysis in today’s overwhelming information age.

Analysis paralysis could slow your investment progress, but setting goals can help

One detrimental effect of analysis paralysis is that it can slow your investment progress significantly.

Imagine you have decided to invest £10,000 in the stock market, adding a substantial injection of capital into your existing investment portfolio. You are searching for opportunities that carry medium risk, and are aware that most investments should be made over at least five years or more.

Yet even with this knowledge, there is still so much left to consider. You might get bogged down in the past performance of the fund you’re researching, become worried about recent market fluctuations, and continuously weigh up the opportunity cost of choosing a route for your wealth.

The truth is: you can never guarantee the performance of an asset. Past performance is not a reliable indicator of future performance, so without a crystal ball, you never truly know how your investments will perform.

Doing your research is very important, but when it comes down to it, the key elements to be aware of are:

  • The asset class(es) you wish to invest in
  • How successfully these investments will diversify your portfolio (or whether you’re putting all your eggs in one basket)
  • Whether the investment aligns with your tolerance for risk
  • The environmental, social, and governance (ESG) impact of the funds you choose
  • Whether or not these investments are likely to push your wealth closer to your overall goals.

Indeed, if you get overwhelmed by the nitty gritty, you could find yourself reluctant to invest at all. There’s no such thing as a perfect investment, so waiting around for the ideal circumstances is likely to be a fruitless endeavour.

Whereas reviewing your goals for your portfolio, and weighing up how the investments you’re choosing could meet them, could be more beneficial than wading through performance figures.

Working with a Kellands financial planner can help cut through the noise and reduce your analysis paralysis

Managing an entire investment portfolio, including doing all the research required, could push you into a state of analysis paralysis.

It’s easy to procrastinate when you feel overwhelmed – and doing so could leave much of your wealth sitting in cash, which as you may know, is likely to lose spending power against inflation as the years go by.

Fortunately, working with an experienced Kellands financial planner can ease the analysis paralysis you’re experiencing.

Your financial planner will:

  • Listen carefully to your wealth goals, including the timeline over which you’d like to invest, your appetite for risk, and your growth targets
  • Use our years of experience to design an investment portfolio that meets those desires where possible
  • Provide reassurance when you experience anxiety, doubts, or analysis paralysis.

As a result of our goals-based approach, working with a professional can have tangible benefits when it comes to your wealth. A Kellands financial planner can:

  • Review your portfolio as it is, and help you form an expansion strategy
  • Perform due diligence on the funds and assets you are interested in, and explain their findings in an accessible format
  • Use top-rated industry software to review your portfolio’s performance on an ongoing basis
  • Make changes to your portfolio where appropriate.

With the help of an expert financial planner, it’s likely your analysis paralysis could be replaced with confidence and peace of mind. You can pursue new wealth opportunities more decisively, as we cut through the noise and help you stay informed without getting overwhelmed.

Get in touch

Do you overthink your investments? Email us at hale@kelland.co.uk, or call 0161 929 8838.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate cashflow planning.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

< back to News & Views

News & Views

May 23, 2024

How could stealth taxes affect your wealth in 2024?

In the past four years, many aspects of your financial life may have changed.
Read more