If you are a novice investor, approaching a financial advisor may help you make better investment decisions. To deal with overconfidence bias, it would help if you make informed investment decisions after performing fundamental and technical analysis. Overconfidence bias can put you in big trouble, so overcoming it is crucial. Ronil was overconfident about his investment decisions, and Kenil was overconfident about the information he received. He got lured and invested in the investment scheme without thoroughly understanding the investment scheme.īoth these instances show overconfidence bias. By trusting his investment ability and avoiding other factors, he allocated 20% of his net worth in shares of ABC Ltd.Īnother investor, Kenil, learned from a friend that if he invests ₹1,00,000 in an investment scheme, the amount will double in two years. would go up from ₹184 to ₹250 in a month. Overconfidence bias:įor instance, Ronil has been investing for the past seven years, and from his past successful experience, he believed that the stock of ABC Ltd. 7 Behavioural Biases Investors Must Avoid 1. What Are Behavioural Biases In Investment Decision-Making?īehavioural biases in investment decision-making mean the beliefs and preconceived notions that affect your decisions related to your investment actions. This article highlights various behavioural biases in investment decision-making and ways to overcome them. Therefore understanding and avoiding behavioural biases in investment decision-making is essential. It can also happen while we make investment decisions. Sometimes we regret our choices because we get trapped by our behavioural biases and don’t consider other factors. Be it career-oriented or related to acquiring products and services, etc. Many of our life decisions are directly linked with emotions.
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