Behave yourself
Behavioural scientists have found that people often take risks that don't
match their level of investment expertise.
For example, we slap ourselves on the back when our investments do well and
put success down to our own skill. But then we tend to pass off poor results as
'bad luck' rather than mismanagement. Unfortunately, this means we don't always
learn from our mistakes and seek expert advice when we really need it.
Don't hold on to losers
Believe it or not, people are much more inclined to sell their winners than
their losers! Research tells us that people will put off selling a
badly-performing share because they are reluctant to admit an error. So
investors compound their mistake - and their loss.
Test yourself on your own behaviours by downloading our
Investing Truths booklet (PDF, 279KB).
Keep emotions out of it
Another common investor mistake comes from paying too much attention to
information that has no real bearing on an investment decision. For instance,
you may have a personal debt and decide to sell an asset to pay it off. You're
likely to regard the amount of the debt as the acceptable selling price. This
may have nothing to do with the value of the item, but you have an emotional
need to clear the debt. This can lead to making poor decisions about the price
at which to buy or sell.
Read more in our brochure Investor
misbehaviour.
Use expert managers
Fund managers often outperform individuals because their investment approach
is more structured and they are trained to avoid poor investment behaviours.
They also have access to the latest market data and comprehensive research and
trend analysis. In virtually all cases, you are better off employing experts
because of the economies of scale, resources, time, training and expertise
involved.
Seek advice
You employ an expert to fix your car, so why trust yourself with something
equally complex and more important - your financial security. For the best
results, consult a financial adviser.
Seek advice.
RSS feeds
