I’ve been planning to sell some company stock and diversify into other investments for a while now. The actual sale is simple—just a few clicks. But before that, I need to research various tax implications. This involves understanding capital gains tax, the timing of the sale, and how it might affect my overall tax situation for the year. It’s not just about selling the stock; it’s about making sure I do it in the most tax-efficient way possible.

There are other details, too, that require calling someone for clarification. For instance, I might need to consult with a financial advisor or a tax professional to understand the nuances of my specific situation. Because that sounds unpleasant and time-consuming, I haven’t done it yet. This procrastination is a common issue many people face when dealing with complex financial decisions.

Behavioral finance experts call this cognitive bias “complexity aversion.” It’s the tendency to avoid tasks that seem complicated or overwhelming, even if they are beneficial in the long run. This aversion can lead to significant delays in making important financial decisions, which can have a substantial impact on one’s financial health.

In my case, it’s not a huge issue. I have other investments and a diversified portfolio, so delaying this particular decision won’t drastically affect my financial situation. But if complexity aversion is preventing you from investing in the stock market at all, it’s something you should address, advises Amos Nadler, founder of Prof of Wall Street and a Ph.D. in behavioral finance and neuroeconomics.

“It’s the biggest barrier to building wealth for people who are not in markets or who have never invested before,” he says. This statement highlights the importance of overcoming complexity aversion to achieve financial success. For many people, the fear of making a mistake or the perceived difficulty of understanding the stock market can be paralyzing.

Staying on the sidelines means sacrificing your greatest asset as an investor: time. The longer you invest, the more time your money has to grow at a compounding rate. Compounding is the process where the value of an investment increases because the earnings on an investment, both capital gains and interest, earn interest as time passes. Each year you delay entering the market could cost you thousands of dollars in future net worth.

Consider a 20-year-old who invests $200 a month into a retirement portfolio with an annualized return of 8%. By age 67, she would have $1.25 million saved. This example illustrates the power of compounding over a long period. If she starts at age 25, her total drops to about $830,000. Waiting until age 30 reduces her savings to $547,000. These figures demonstrate how critical it is to start investing as early as possible.

Spend a few minutes with compounding interest calculator to see for yourself. This tool can help you understand the impact of different investment amounts, rates of return, and time horizons on your future wealth. By playing around with the calculator, you can see how small changes in your investment strategy can lead to significant differences in your long-term financial outcomes.

So if enrolling in that 401(k) seems too complicated, now is the time to talk to someone in HR about getting started. Your future self will thank you. A 401(k) plan is a retirement savings plan offered by many American employers that has tax advantages for the saver. By contributing to a 401(k), you can take advantage of employer matching contributions, tax-deferred growth, and the power of compounding.

Overcoming complexity aversion requires a few key strategies. First, break down the task into smaller, more manageable steps. Instead of thinking about the entire process of selling stock and reinvesting the proceeds, focus on one step at a time. Start by gathering the necessary information about your current holdings and potential tax implications. Then, schedule a time to speak with a financial advisor or tax professional.

Second, educate yourself about the basics of investing and financial planning. There are many resources available, including books, online courses, and financial news websites, that can help you build your knowledge and confidence. Understanding the fundamentals of investing can make the process seem less intimidating and more approachable.

Third, seek support from others. Whether it’s a financial advisor, a friend who is knowledgeable about investing, or a community of like-minded individuals, having someone to guide you and answer your questions can make a big difference. Don’t be afraid to ask for help when you need it.

Finally, remember that taking action, even small steps, is better than doing nothing. The longer you wait to start investing, the more you miss out on the benefits of compounding. By taking the first step, you can begin to overcome your complexity aversion and start building wealth for the future.

In addition to these strategies, it’s important to recognize that complexity aversion is a natural human tendency. Many people experience it in various aspects of their lives, not just in financial matters. By acknowledging this bias and actively working to overcome it, you can improve your financial decision-making and increase your chances of achieving your long-term goals.

Behavioral finance experts like Amos Nadler emphasize the importance of addressing cognitive biases to improve financial outcomes. Complexity aversion is just one of many biases that can affect our financial decisions. Others include loss aversion, where we fear losses more than we value gains, and overconfidence, where we overestimate our ability to predict market movements.

By understanding these biases and developing strategies to mitigate their impact, you can make more rational and informed financial decisions. This can lead to better investment outcomes and a more secure financial future.

In conclusion, complexity aversion is a significant barrier to building wealth, especially for those who are new to investing. By breaking down tasks into smaller steps, educating yourself, seeking support, and taking action, you can overcome this bias and start making progress toward your financial goals. Remember, the key to successful investing is to start early and stay consistent. Your future self will thank you for taking the time to invest in your financial education and well-being.

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