What behavioural finance offers is the middle ground: you diversify your risk across all the different types of investments-from stocks to bonds to real estate, and so on. That way,... Read More
Author: seofinxl
Diversification to Control Risk Diversification of investments is just another area that the behavioural finance stream looks into. Loss aversion makes many investors so averse to risk that they will only... Read More
Financial advisors often use behavioural finance techniques by asking you probing questions about future expectations to help client’s better estimate. A good retirement plan will always account for both expected and... Read More
Realistic Retirement Goals People overestimate how much they will have or discover they need in retirement because of optimism bias or simply because they cannot see into the future. Behavioural finance... Read More
Thirdly, the dollar-cost averaging can also be accomplished through the use of automatic savings plans because it enables you to buy investments with consistency as time goes and irrespective of... Read More
Automatic Savings to Help Mitigate Present Bias The most interesting takeaway from the best behavioural finance models is the way of automating one's savings and investment. That neutralizes present bias, particularly... Read More
in immediate pleasures. You then can take steps to prevent acting impulsively-for example by automatically investing in your retirement accounts. In parallel, identifying overconfidence biases could prompt you to seek... Read More
Recognition and Elimination of Biases Human beings by nature have biases. And to begin the process of implementing the phases of retirement planning improvement, first you must be informed of the... Read More
Herd Mentality: There are many investors who follow trends or imitate the action without understanding the reasoning behind the decision. They may buy or sell when others do so at... Read More
Over-confidence: Overestimation of one's ability to control investments or predict the movements of the market may lead to some quite adventurous decisions or inadequately diversified portfolios. Loss Aversion: There is more... Read More