What is the fine line between Analysis Paralysis and Extinct by Instinct?
Analysis paralysis is when the fear of either making an error or forgoing a superior solution, outweighs the realistic expectation or potential value of success in a decision made in a timely manner. This imbalance results in suppressed decision-making in an unconscious effort to preserve existing options. Also known as overthinking.
This happens all the time with regards to investing. In the stock market it’s never the perfect time to step in or to get out. You will never be at the lowest to step in and never at the highest to get out. But as warren buffet says, time in the market beats timing the market. It is better to just begin before it is 100% right then to wait and miss out. Don’t be paralyzed by analysis.
On the other hand though… on the contrary is extinct by instinct. It means to make an incorrect decision in haste without detailed or with little analysis. Such decisions can be detrimental as much as the analysis paralysis. So, here’s a little advise. Only invest money you can afford to lose. Invest in stuff you know something about and are appropriate for your level of risk. If you have money left to invest, read up on what you want to invest in and go for it. Don’t overdo the research but don’t make rushed decisions. Never listen to a random guy on the internet. It’s weird how people blindly follow advice from an unprofessional internet stranger when it comes to investing but are not willing to listen to a financial advisor or make own decisions. (Hi, I’m an internet stranger as well, don’t take my advice too serious, make your own decisions 😉 )
Don’t fall for overcomplicated explanations. You don’t look dumb if you don’t invest in stuff you have little understanding of. If you understand what you are doing, the risk is so much lower and the chances of a high return of investment are increasing. So your best bet is to stay there. Expand your knowledge before expanding your investments into unknown territory.
Best of luck!