Why Decision Fatigue could make you a Poor Investor
One of my favorite author is Tim Ferriss, the author of Four Hours Workweek and he talks about this concept called “Decision Fatigue“. I was thinking about that recently and how that applies to my life but also how that applies to everyone else’s life as I’m in the business of helping people invest in property. The concept is really simple. He said that if you make too many decisions throughout the day, you’re actually going to get decision fatigue and if you are in the stages of decision fatigue, you are going to make reckless, emotional and perhaps even worse, you’ll make no decisions at all. I thought, how is that going to apply to me as a property investor.
If you think about all world-class performers, they have some form of routine or checklist that they go through to automate the things that they need to do every single days. And like a pilot who is about to take off with maybe 200 – 400 passengers under their care, every single time, no matter what, they go through a checklist to make sure everything is ok and to make sure that they can take off safely and have a really good chance of landing on the other end. Well, property investors need to do the same thing as well because it’s not just a case of investing in property and hoping for the best because there is so much information out there. There’s blogs, articles and videos and people can easily get overwhelmed by what they need to do.
If they are making decisions when they’re in decision fatigue, they too will make reckless and emotional decisions or worse still, they might even procrastinate.
There is some things that you need to master when it comes down to investing in property. There are four areas: Asset Selection, Borrowing Power, Cash Flow Management and Defence. We talk about these things all the time. That’s a simple way to help you not get caught up in decision fatigue by knowing they very things that you need to understand intimately to be a really good property investor. When you make the decision to actually invest in property, there are five steps that you need to go through. I need to clarify my position, I need to evaluate what that means to me and my circumstances, I need to put a plan in place so that I can deliver on that, I need to then implement it and finally, I need to manage that process. And again, another routine or another checklist that I need to go through so that I don’t suffer from decision fatigue when I’m investing in property. Like all world class performers, you really just need to have an awareness around this and know that its actually coming and put things in place to make sure that you don’t suffer.
I guess the important point to note here is for a property investor is that property investing is actually a process, it’s not an event. If you think about these things in advance, chances are you won’t make reckless decisions or worse, you won’t procrastinate on your decisions to actually invest in property in the first place.