Decision Fatigue – Why You Should Be Automating Your Investments

In the modern world we are absolutely spoiled for choice. There is such abundance that if you’re reading this right now you probably have hundreds of other things vying for your attention this very second. It’s a mark of how far we’ve come, but also indicative of something more sinister that we all face every day. It’s something called decision fatigue.

Decision fatigue is a characteristic of our psychology that refers to our brain’s inability to maintain the same quality of decision making, the more decisions we have to make. With every decision that you make in any given day, week, or month, your decision reserves get depleted a bit and you make poorer and poorer choices. At its very essence, your discipline and decision-making apparatus loses its steam.

“The truth is, it’s not about willpower, it’s about reducing decisions.”

Robyn Conely Downs said it like this:

This is something that we face all the time, but it’s a real problem when it comes to investing – because making small investment mistakes, or neglecting your portfolio altogether, compounds over the long-term to become a much bigger problem. It’s for this reason that you should really be automating your investments as much as possible. When you automate your investments you don’t require the mental willpower to optimize your portfolio, you can rest easy knowing that your pension, ISA, tax year-end, asset allocation and everything else is taken off. It takes a huge weight off your shoulders.

How do you do it? You work with a high-quality financial planner, that’s how. When you work with a professional, they will be able to help you set up the systems and structures that you need in order to take advantage of full financial automation. If your financial planner is worth their salt, they will help you automate things like this:

  • Automate your savings by using direct debits or standing orders for your ISA and pension – ensuring you’re always prioritizing maxing those out.
  • Rebalance your portfolio asset allocation on a regular basis so that you don’t have to worry about it in times of market turmoil.
  • Automate your tax structuring to use all the allowances available to you and be as efficient as the law allows.
  • And many more…

When you do this, you’ll put yourself in a great position to avoid the late-night investment decisions that your depleted mind makes on your behalf – and instead, know that you’ve got a professional on your side automating away the emotion, and sticking to best practice for the long-term. By sticking to the tried and true, you won’t get carried away with the latest trend of the moment, but rather know that your money is working for you.

You can take that leftover decision-making capacity and apply it to what really matters – leading a purposeful and intentional life with the people that you love. Financial decisions should not be a stress, they should take care of themselves in the background. It’s a decision that your future self will thank you for.