Emotional pitfalls to avoid in investment decision making

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1. Confirmation bias

We all tend to seek for info that support our beliefs or conclusions

Sometimes it leads to neglecting true info that doesn’t support our decisions

Be cautious of this during investment

Look for balanced data and opinions

2. Recency bias

We all know this too well https://abs.twimg.com/emoji/v2/... draggable="false" alt="😂" title="Gesicht mit Freudentränen" aria-label="Emoji: Gesicht mit Freudentränen">

If the market has crashed recently, majority think it will happen again & vice versa

Don’t think about market rises & crashes all the time

Remember

Time in the market > Timing the market

3. Follow the crowd instinct

Investors are likely to follow the crowd

Either investing in rising bull or running from bear leading to huge sell-offs or buying

Think logically & analytically before making investment decision

Make decision based on data & don’t follow the crowd

4. Choices overload

We all assume the more choices the better is it

But it causes confusion in investment due to info overload

We may end up taking forever to make decision resulting in lost opportunities

Having a handful of choices > tons of choices

Aim for moderation

Be in control of your emotions while making huge investment decisions

Think with clear & logical mind