Overview – Granting Yourself the Ability to Choose
Have you ever been forced to do something not because you wanted to, but because you had no other choice?
Very few people, if any, enjoy being forced to do something – it’s even worse when we’re forced to do something because we’re backed into a corner with no other options left.
Most of us take pride in the fact that we control the decisions we make and the actions we take, so nothing is worse than having that freedom of choice taken from us and being at the mercy of others or of factors beyond our control.
One of the beautiful, yet equally terrifying, truths of investing is that an investor wields a lot of power over their financial future. Sure, there are factors that are beyond their control, but the choices they make ultimately determine how things will turn out, for better or for worse.
It’s very hard to achieve the outcomes we want if we have very few investment options to pick from. An investor can’t say they’re in control of their future success or failure if they’re constantly forced to take only one path.
Because of this, the more options an investor has to choose from, the better.
The Importance of Having Options as an Investor
Why should investors care about how many options they have to choose from in the first place? Aren’t a few, high-quality options better than dozens of mediocre ones?
While it’s true that a few high-quality options have the ability to significantly advance your goals, the first step is to make sure you have options to choose from in the first place.
A handful of mediocre options is much better than being forced to take a single course of action, regardless of how you feel about it. When you’re forced to take a certain path the only thing you can really do is hope that everything will work out – unfortunately, hoping for the best isn’t a valid investment strategy.
The whole point behind giving yourself more options as an investor is so that you give yourself a bit more breathing room when deciding which course of action will help you best achieve whatever goal you have in mind.
One of the most appealing features of investing, at least in my opinion, is that investors are free to decide how exactly they want to work towards their investment goals.
What sort of investment instruments do I plan to purchase? What sort of goals do I want to set for myself? What sort of strategies do I want to deploy?
Imagine you start investing in the stock market for the first time, but you’re only forced to buy stocks from your own country. Sure, there may be some attractive investment opportunities at home, but eventually, you’ll probably want to expand your horizons if you want to diversify or look for even better prospects.
Can you imagine seeing attractive investment opportunities overseas, but not have the ability to purchase them? It would certainly be a very frustrating feeling, to say the least.
Investors can share similar goals, but that doesn’t mean they all need to take the same path to get there. Having options as an investor allows you to determine which path works best for you in a way that won’t burn you out in the process. What works great for one investor may work terribly for you, and vice versa.
Not only that, but having options means you have the ability to try different approaches in case the one you originally went with doesn’t work out as expected.
Is one of your investment strategies failing to deliver results? No problem, switch over to another strategy that you’ve had in mind. Are you experiencing lacklustre results with bonds but have experienced major success with crypto? Then make the switch.
Remember, the whole point behind having options as an investor is to grant yourself more flexibility, and part of that is giving yourself the ability to take detours when needed as you work towards your goals.
You can’t change your current course of action if you have no alternatives to choose from. Every option you create for yourself is another degree of freedom that you also grant yourself – in other words, options in investing give you room to experiment and adjust. What sort of investor would say no to this?
If creating more options for yourself in investing is so important, then surely a task like this is very time-consuming and difficult, right? Depending on the type of options you come up with, it certainly can, but it doesn’t have to be.
Creating Investment Options Doesn’t Have to Be Difficult
Say you want to create more options for yourself as your portfolio starts to grow.
For example, imagine you’ve been investing in the Canadian stock market ever since you started investing, which is several years now, and recently you’ve decided you want to diversify your portfolio.
What sort of options are available to you?
One possibility could be to invest in overseas markets such as Europe and Asia. After all, there are ample investment opportunities in these markets waiting to be discovered.
While this definitely sounds enticing, this would require you to open a brokerage account that would allow you to purchase investment instruments from these regions. Not only that, but you’ll need to understand how tax laws will apply to you as a foreign investor, how to report your global income, etc.
On the other hand, you can expand your investment horizon to other industries you haven’t looked at before in your home country, or if you insist on making some international investments then perhaps you can look to the U.S. for prospects – it’s not uncommon for Canadian brokers to provide clients with a Canadian and U.S. investment account as part of their service.
Whether you decide to create some very complicated options or very simple ones, the ultimate goal remains the same: to give yourself more wiggle room in order to maneuver the investment landscape on your own terms.
What matters is that the options you create for yourself achieve this. How complex or simple you decide to make your options is up to you.
While having an ample number of options to work with is certainly beneficial, it’s possible to have too many to choose from, preventing you from choosing one at all.
Remember Not to Fall Into the Analysis Paralysis Trap
I’ve previously talked about the dangers of analysis paralysis, and how, when presented with too many variables to assess and choices to select from, can lead to a person not making any sort of decision at all.
Not having enough options to choose from can certainly impede your progress as an investor, but so can having too many.
To complicate matters further, not every investor reacts to analysis paralysis the same: what seems like too many options for one investor may not be enough for another.
Therefore, the challenge that investors are faced with is to find that sweet spot of “just enough” options to choose from, but not so many that it overwhelms them and causes them to freeze up.
Unfortunately, understanding what this “goldilocks” zone of available options looks like can only be discovered over time and with experience. It’s impossible to say what “just enough” options are because every investor is different. So, the sooner you discover what this sweet spot is for you, the better.
Wrapping Up
Investors have the freedom to decide how they want to achieve their goals, but this freedom of choice is pointless if an investor has no options to choose from in the first place.
Having multiple options to work with is so crucial because it grants investors the power to determine which path offers the best shot of helping them reach their goals, as well as the ability to pursue an alternate route in case the path they originally embarked on doesn’t work out.
You can’t possibly hope to create your dream portfolio if you have no say in how you want to create it – having options at your disposal gives you the power to do that.
While having options to work with is crucial for every investor, it’s possible to have too many to choose from, which could quickly lead to analysis paralysis. The challenge investors face is finding the balance between having enough options to choose from, but not having so many that it overwhelms them.
