Munster

The human psyche is full of little quirks – strange behaviours that we can’t always account for and in some cases we aren’t even aware of. They’re not just nature’s little jokes though, very often we display hard-wired behaviours that evolution has put in place for good reason, to help us out of situations that we wouldn’t consciously react to quickly enough.

Investment is a long-term pursuit – it’s about setting out a plan, devising a strategy and then sticking to it. We know that past performance doesn’t guarantee future returns and we accept there’ll be ups and downs along the way. But in the long run, a well-planned and executed investment approach stands to help us grow our money.

In an ideal world, we’d all make sensible, carefully calculated decisions about our money. We’d leave aside our emotions and decide our next steps based on facts, iterative learning and the evidence placed before us.

There are many types of blind spot in everyday life – not being able to see the cyclist just behind your passenger side, the two glasses of wine you neglected to include in your calorie counting, the way you listen to someone else’s problems then respond by talking about yourself.

Anchoring Bias: Are you biased? No of course not. But then you would say that, wouldn’t you?

First, let’s stop talking about ‘bias’ and start talking about ‘biases’. There are many, in fact, in our new White Paper, Making Better Decisions: Know Your Behavioural Biases, we identify 17 different types of mental process that can dangerously skew your financial decisions.