Common Investor Biases That Can Harm Your Portfolio

How Subconscious Human Behaviors Can Impact Your Investment Success
By Kathy Longo, CFP®, CAP®, CDFA
Wednesday, 06 July 2022

Common Investor Biases That Can Harm Your Portfolio

If you’ve ever heard of behavioral finance, you know there are some very human ways we can make mistakes in our financial decision-making – and researchers have been studying these unconscious impacts for a long time. How and why we make financial decisions is dependent on a matrix of information and insight, a complex equation that can factor into the success – or failure – of our investment portfolios.

Investor biases, a psychological occurrence in which an investor makes decisions based on preconceived ideas or beliefs, could potentially lead to investment mistakes.

Investment Strategy and Avoiding Emotional Interference

Plan Ahead to Overcome Emotional Reactions that Can Skew Prudent Investment Strategy

By Kathy Longo, CFP®, CAP®, CDFA
Wednesday, 06 October 2021

Investment Strategy and Avoiding Emotional Interference

I write a lot about the interconnectedness of money and emotions, and I also talk about it frequently on my Flourish Financially podcast. That’s because we humans are emotional creatures, and our feelings can have a tremendous impact on our behavior. Of course, that includes financial decision-making, which permeates many aspects of our lives. When it comes to investing, in particular, the natural highs and lows of the stock market can have emotional effects. If we’re not careful, these emotions can inhibit our ability to make sound financial judgments. In fact, many poor investment decisions have been made by investors who became too emotional and let their behavioral biases overrun their rational thoughts.

For this reason, it’s crucial to understand how emotion can interfere with your investment success. We all go through life with various ups and downs and hiccups along the way. This can cause fear and uncertainty – both fertile fields for emotional financial decision-making.

Below we will discuss three emotional biases that can wreak havoc on your investment strategy – if you let them.

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