Is Your Portfolio Being Derailed by Biases?
When it comes to our portfolios, humans are not exactly rational investors. In fact, there are six cognitive biases that can be harmful to investor portfolios. They include: overconfidence, familiarity, information overload, anchoring, herding and loss aversion. These detrimental biases can derail an investor’s ability to make the best possible decisions about building wealth.
For GWA, one of the important aspects of our unique “3P Approach” is behavior management. We recognize that everybody is different, and we work with each of our clients to help them manage and control the potential to react in ways that can be detrimental to their portfolios. In this infographic, you can find out more about the six cognitive and behavioral biases that can derail your portfolio goals.
You can also read a more in-depth analysis about financial bias in our article, Six Cognitive Biases That Can Derail Your Portfolio published by Investopedia. In this article, we offer an outline of how to recognize these biases, how they affect us and how to overcome them. By understanding the natural tendencies most investors have, we hold the key to safeguarding the negative impact these biases can have on their decision-making process.
This is why it is important for a good financial advisor to help you identify your innate tendencies, and draw up a plan to manage this behavior. At Global Wealth Advisors, behavioral management is a part of our unique “3P Approach”.Back To Blog