How to Beat Behavioural Biases in Investing

Turbulent markets are often when investors make their worst decisions. Here's a checklist to help you beat your biases 

Samantha Lamas 20 May, 2020 | 9:47AM

checklist

Our minds take shortcuts when we make decisions. When we aren’t sure where to order a takeaway from, for example, we look to online ratings to help us decide. Usually, these shortcuts are for the better - they help us react quickly and help us manage the thousands of decisions we make every day.

There are times, however, that mental shortcuts lead us astray - and that’s when they become biases. The complexity of our finances means that many of the shortcuts we use in everyday life can take us down the wrong path when we think about money, and even more so when we’re stressed, distracted, unsure, and anxious, as many of us are today. There’s no way to erase our biases, but we can use tested techniques from behavioural science to prevent them from affecting our decisions.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Samantha Lamas  Samantha Lamas is a behavioural researcher for Morningstar

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