Biases that influence how we think can affect the investment decisions we make.

You are in control

Myth 1

You are in control

Fact

You have little control over how markets can affect your investment outcome

Thinking you are in control can lead you to trade too much and/or try to time the market. It may also cause you to have too little diversification in your portfolio.

You are in control
Ask yourself why you are buying the investment and what might go wrong. Maintaining a long-term perspective can also keep the illusion of control in check.

Myth 2

Best to avoid change

Fact

Sometimes, avoiding change may not always be best, even if it looks safe

You may feel more comfortable keeping things the same because of inertia, and not as a conscious decision. This is partly due to your instinct to cling onto the familiar, especially when things are uncertain.

Best to avoid change
A change of perspective can help with inherent biases. E.g. Wondering if you should add more bonds to your portfolio? Ask yourself why you should NOT.
Best to avoid change

Myth 3

Stick to what you know

Fact

Don’t miss out on the potential of less familiar but attractive options

By preferring to invest only in companies or markets which you are more familiar with (e.g. domestic bias), investors may also fail to diversify their portfolios sufficiently.

Stick to what you know
Familiar does not mean safe. A financial adviser can help you validate your existing investments and make you aware of other opportunities.
Stick to what you know

Myth 4

If you’re losing money, wait to make it back

Fact

Sometimes, it is best to cut your losses early and move on to find other attractive options

Research suggests that investors fear losses more than they desire gains. This is why they refuse to sell loss-making investments in the hope of making their money back.

If you're losing money, wait to make it back
Imagine you need to sell an existing investment before taking on another. This can help you think about what you’re missing out and be more selective.
If you're losing money, wait to make it back