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I got a serious case of decision fatigue recently while trying to invest. (As a note, this means that I am very much NOT soliciting financial advice with this

by rspeer 11y ago

I got a serious case of decision fatigue recently while trying to invest. (As a note, this means that I am very much NOT soliciting financial advice with this comment. If you want to tell me a different decision I could have made, especially something I considered such as index funds, you are doing the opposite of helping.) As one of those things you're supposed to do when you realize you're an adult, I decided to automatically invest a portion of my paycheck. There are of course a lot of investment companies who would love to help with that, and first I had to pick one. I picked Merrill Edge because it seemed the easiest to set up the automatic deposit with. At that point, the site told me: Welcome! You want to invest in a mutual fund, right? Here are EIGHT THOUSAND of them you could choose from. Good news! You can even filter them by 20 different criteria that you would know what they mean if you worked in finance! All the highest-rated funds of course have statistically indistinguishable rates of return, so there is no real financial basis to make the decision unless I think I'm clever enough to know who is a better fund manager than who, which of course I'm not. Oh, by the way, they've tried to address the problem. They have a set of "Merrill Edge Select" funds. Of course you get to them in a different interface, you have to choose which jargon-ful category of Select funds you want, and once you do so you still get 20 options in 4 sub-categories. So I could just make an arbitrary decision, and trust that these products are indistinguishable, right? Not so fast. My first arbitrary choice led me to nearly start an automatic investment in a fund that specifically makes socially conservative, "Biblical" investments, and I found this out by googling the name of the fund at the last minute. Egad. I have been through a process that was much better than this. It wasn't on the Web, it involved actually walking to an investment bank's storefront. Aside from unavoidable questions about taxes, they asked me two things: * What year do you plan to retire? * How much risk can you tolerate? And then they picked one fund. Take your 8000 choices and shove them, Merrill Edge. In case I need to say it again: no financial advice please.

BookmarkSaver 11y ago
You really should invest in your own personal knowledge of the subject. Going to an investment advisor is a recipe for getting gauged. And this is a really big deal when setting up your plan for retirement. If you are losing small percentage points due to a lazy advisor or the greedy "managed" plan that they set you up with, the effects will be magnified enormously over decades of compound interest. To the tunes of tens or hundreds of thousands of dollars. Serious, everyone should make an effort to get even a basic financial education. It is by far the best investment choice you could make. Relying on "professionals" is unbelievably expensive come your retirement.
- rspeer 11y ago
  You see the part about "no financial advice please"? I listened to people like you for a while. I tried not investing anything until I had spent a bunch of my free time on getting a "basic financial education". Now that I have a basic financial education, I know that I know nothing, and if I invested based on my own personal knowledge it would be a disaster. I also know from experience that if I try to save that tiny margin from making my own decisions, all the investment banking sites would say "okay, smartass, you're on your own, don't expect anything convenient to ever happen". And I wish I had just invested first and spent that time learning things that are interesting. All that time and interest wasted. Your advice adds to the problem of decision paralysis and it only works for people who are really interested in money.
- Apocryphon 11y ago
  That's the rub, isn't it. Financial literacy is as contentious a field as nutrition is[1]. I recently got Tony Robbins' Money: Master the Game [2]. It claims to use both common sense principles and tips from investment masters, and ultimately settles upon pretty reasonable ideas (such as choosing index funds and avoiding mutual funds). Sure, he might be a motivational speaker- but he echoes advice from people in the know, right? Turns out some online investment bloggers do recommend it [3], while others don't [4]. Still others have created a three-hour podcast critiquing it [5]. At some point, one just gives up looking for the best class to take and settles on whatever comes along. To his credit, Robbins did teach me that investment advisors are not to be trusted to keep your best interests in mind- what you should be looking for is a fiduciary. [1] http://www.psmag.com/business-economics/quest-improve-americas-financial-literacy-failure-sham-72309 http://www.psmag.com/business-economics/quest-improve-americ... [2] http://www.amazon.com/MONEY-Master-Game-Financial-Freedom/dp/1476757801 http://www.amazon.com/MONEY-Master-Game-Financial-Freedom/dp... [3] https://investorjunkie.com/38192/money-master-game-review/ https://investorjunkie.com/38192/money-master-game-review/ [4] http://www.basonasset.com/yes-i-actually-read-most-of-tony-robbins-new-book/ http://www.basonasset.com/yes-i-actually-read-most-of-tony-r... [5] http://radicalpersonalfinance.com/a-comprehensive-review-and-critique-of-money-master-the-game-by-tony-robbins-rpf0109/ http://radicalpersonalfinance.com/a-comprehensive-review-and...
jameshart 11y ago
Yes, this is one of the effects of the replacement of customer service agents with web interfaces. The same has happened with travel; searching for vacation options nowadays guarantees you access to every possible room in every possible location, ordered by the effectiveness of their SEO strategy. Previously, you used to go through travel agents and tour operators who offered curated selections of hotels. Sure, just like with your financial choices, the selection was potentially compromised - maybe the agents are getting extra commission to promote one hotel or investment plan - but there are other incentives against them completely screwing you (they are interested in recommendations and repeat business after all). So sure - now we can bypass the agent and get to the raw list of every possible available product; but the cost is an inability to tell meaningless choices from meaningful ones; the risk of making a bad choice is all on us (no opportunity to blame the guy who sold us it); and that combination leads to choice paralysis.

by rspeer 11y ago

BookmarkSaver 11y ago

You really should invest in your own personal knowledge of the subject. Going to an investment advisor is a recipe for getting gauged. And this is a really big deal when setting up your plan for retirement. If you are losing small percentage points due to a lazy advisor or the greedy "managed" plan that they set you up with, the effects will be magnified enormously over decades of compound interest. To the tunes of tens or hundreds of thousands of dollars. Serious, everyone should make an effort to get even a basic financial education. It is by far the best investment choice you could make. Relying on "professionals" is unbelievably expensive come your retirement.

rspeer 11y ago
You see the part about "no financial advice please"? I listened to people like you for a while. I tried not investing anything until I had spent a bunch of my free time on getting a "basic financial education". Now that I have a basic financial education, I know that I know nothing, and if I invested based on my own personal knowledge it would be a disaster. I also know from experience that if I try to save that tiny margin from making my own decisions, all the investment banking sites would say "okay, smartass, you're on your own, don't expect anything convenient to ever happen". And I wish I had just invested first and spent that time learning things that are interesting. All that time and interest wasted. Your advice adds to the problem of decision paralysis and it only works for people who are really interested in money.
Apocryphon 11y ago
That's the rub, isn't it. Financial literacy is as contentious a field as nutrition is[1]. I recently got Tony Robbins' Money: Master the Game [2]. It claims to use both common sense principles and tips from investment masters, and ultimately settles upon pretty reasonable ideas (such as choosing index funds and avoiding mutual funds). Sure, he might be a motivational speaker- but he echoes advice from people in the know, right? Turns out some online investment bloggers do recommend it [3], while others don't [4]. Still others have created a three-hour podcast critiquing it [5]. At some point, one just gives up looking for the best class to take and settles on whatever comes along. To his credit, Robbins did teach me that investment advisors are not to be trusted to keep your best interests in mind- what you should be looking for is a fiduciary. [1] http://www.psmag.com/business-economics/quest-improve-americas-financial-literacy-failure-sham-72309 http://www.psmag.com/business-economics/quest-improve-americ... [2] http://www.amazon.com/MONEY-Master-Game-Financial-Freedom/dp/1476757801 http://www.amazon.com/MONEY-Master-Game-Financial-Freedom/dp... [3] https://investorjunkie.com/38192/money-master-game-review/ https://investorjunkie.com/38192/money-master-game-review/ [4] http://www.basonasset.com/yes-i-actually-read-most-of-tony-robbins-new-book/ http://www.basonasset.com/yes-i-actually-read-most-of-tony-r... [5] http://radicalpersonalfinance.com/a-comprehensive-review-and-critique-of-money-master-the-game-by-tony-robbins-rpf0109/ http://radicalpersonalfinance.com/a-comprehensive-review-and...

jameshart 11y ago

Yes, this is one of the effects of the replacement of customer service agents with web interfaces. The same has happened with travel; searching for vacation options nowadays guarantees you access to every possible room in every possible location, ordered by the effectiveness of their SEO strategy. Previously, you used to go through travel agents and tour operators who offered curated selections of hotels. Sure, just like with your financial choices, the selection was potentially compromised - maybe the agents are getting extra commission to promote one hotel or investment plan - but there are other incentives against them completely screwing you (they are interested in recommendations and repeat business after all). So sure - now we can bypass the agent and get to the raw list of every possible available product; but the cost is an inability to tell meaningless choices from meaningful ones; the risk of making a bad choice is all on us (no opportunity to blame the guy who sold us it); and that combination leads to choice paralysis.