Almost half of adults in USA —48%— do not own investable assetsaccording to a survey of Janus Henderson published in 2024. This phenomenon, which affects millions of people, responds largely to a cognitive bias that makes it difficult to make financial decisions: complexity aversion.
Amos Nadlerfounder of Prof of Wall Street and doctor in behavioral finance y neuroeconomicsexplains that this pattern of thinking is one of the main obstacles to accumulation of wealthparticularly among those who have never invested. “It’s a bias we call ‘complexity aversion‘, and it is the biggest barrier to building wealth among people who do not participate in the markets or who have never invested before,” Nadler said in statements to CNBC.
Nadler compares this resistance to investing to the difficulty many people face when trying to start an exercise routine. Lack of knowledge or experience generates insecurity and fear of making mistakes. “Just like someone might say they have no idea how all those gym machines work, a person who avoids financial decisions You might think, ‘This is beyond me. I’m not a numbers person,’” Nadler notes.
This type of mentality not only delays accumulation of wealthbut also limits personal growth in terms of financial education. According to the expert, the idea that finance are too complicated or difficult to handle generates a paralysis that prevents people from taking the first step towards investment.
The complexity aversion is closely related to another common bias: the risk aversion. Many people fear losing their hard-earned money, causing them to prefer to keep their cash instead of investing it. “The reaction is: ‘I’ve worked hard for this, I’m risk-averse. I prefer to have cashalthough I know that inflation It is devouring him. He mercado It’s so volatile it scares me,’” Nadler explains.
This perception, although understandable, can be counterproductive in the long term. The inflation decreases the value of money over time, while marketsweigh your volatilitytend to offer superior returns in the long term.
One of the biggest risks of not investing early is missing the opportunity to take advantage of the compound interesta financial concept that allows investments grow exponentially over time. Nadler warns that delaying investmentseven for a few years, can significantly reduce the net worth in the future.
According to CNBCif a person starts investing 200 dollars a month at 20 years old in a briefcase with an average performance of 8% annuallycould accumulate 1.25 million dollars at the time of retirement at age 67. However, if you start at age 25, that number drops to $830,000. And if you wait until age 30, the total drops to $547,000.
“He time It is the most valuable asset a young person has. Every year you spend without investing can mean losing hundreds of thousands of dollars in future returns”Nadler stressed.
To overcome this bias, Nadler recommends simplifying the process of investment. “Open an account brokerage or self-fund an account retirementlike a IRAit may be simpler than it seems. It requires just a few steps,” he said.
However, one of the easiest and most accessible ways to start investing is through investment plans. retirementoffered by the employerslike the 401(k). These plans allow employees to automatically contribute a portion of their salary and diversify your portfolio with options investment low cost.
“The plan 401(k) It is an excellent gateway to mercado for those who fear making mistakes. Designate a percentage of the salary and choose one or more mutual funds That’s all you need to get started,” Nadler explained.
Many plans retirement offer index funds y target date funds that allow the investorsgain exposure to broad sections of the mercado in an automated way. These diversified instruments help mitigate the risk and facilitate the long term investment without requiring advanced knowledge. “The fact that these funds are widely diversified reduces the risk of catastrophic losses and, at the same time, allows the money grow steadily,” Nadler added.
In addition to simplifying the process, Nadler highlights the importance of financial education to combat the complexity aversion. Become familiar with basic concepts of investment can increase confidence and reduce fear of making mistakes.
“The more you learn about markets and the investmentsthe more comfortable you feel. The lack of education It is one of the main reasons why many people avoid mercadoNadler stated.
The survey of Janus Henderson reveals that, despite the lack of investment Among American adults, interest in learning about finance is growing, which could represent an opportunity for more people to take the step towards accumulation of wealth.
