Inertia can be defined as the tendency to do nothing or remain in the same current state without change. But how can it be hurting your Personal Finances?
Inertia is not necessarily bad for your financial life. For example, one of the strategies used in equity investments is to buy and hold stocks of solid, growing companies for a long time.
Of course, you need to reevaluate the strategy from time to time, but you start from the premise that you are taking a long-term view and will not be checking stock value every 4 hours.
But there are several other scenarios where maintaining inertia will create more problems than solutions for your pocket.
How to end inertia?
The first step is to set aside the thought that “doing something” will cause a lot of extra work and worry. That is, we need to end laziness.
Always remember the other side: Doing nothing will likely cause you more work and trouble in the future. Therefore, action must be taken now.
Let’s look at some examples where inertia will negatively impact your personal finances.
1. Take too long to invest
Have you ever had any money left in your account and ended up delaying the investment of this amount?
There are a lot of people that do this. Some consider the value to be too small and will not yield anything. Others are unsure where to invest and end up out of time or afraid to invest in something that will cause the money to be wasted.
And there are those who are waiting for the best time in the market to go into some application: waiting for the dollar to fall or interest rates to rise. But they still have the money standing there for a long time.
We are not encouraging investment without research or analysis, as in some cases the risk can really be high.
But when in doubt, invest in something conservative and liquid, such as a fixed income. But move, be sure to take advantage of the high interest rates that exist in Brazil while it’s time.
2. Stay for a long time in low pay jobs
Knowing how to save is very important, but having a good income is essential to generate wealth.
You don’t have to be jumping from one job to another just because of a 5% higher salary, this is even harmful.
But you must always be looking for new opportunities, preparing to move up your career and get better salaries.
3. Postpone Pension Plans
It may even be that Pension Plans are not the ideal financial product for your retirement: Those who are well disciplined can come up with their own plan. But the vast majority of the population does not have this level of discipline and awareness.
The problem is that there are many alternatives to private pension plans in the market: PGBL, VGBL, regressive or progressive taxation, etc.
It takes a job just trying to understand the differences between all these options. And with that you are pushing forward the beginning of this important type of savings.