Financial Residency Financial Vitals: Investing Behaviors That Will Wreck Your Financial Plan
What are some of the behavioral tendencies we all can run into that affect our decision-making, and ultimately cause some big mistakes? What do big areas or behavioral tendencies look like?
In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks about investing behaviors that will wreck your financial plan. Knowledge and awareness are needed to avoid behavioral finance mistakes.
Topics Discussed: • What is behavioral finance? When people make errors, mistakes, and biases • Why? People are not rational or self-controlled and don't identify tendencies • Overconfidence: Common idea that you know more than you actually do • Self-serving Bias: Attribute good things/outcomes to skill, bad outcomes to luck • Hindsight Bias: You know more or knew more than you really did in the past • Confirmation Bias: Focus on what confirms beliefs, ignore what contradicts them • Recency Bias: Hone in on short-term and overemphasizes that importance • Refer to your financial plan and remind yourself of your financial goals • Anchoring Bias: Relying and latching onto too much pre-existing info • Loss Aversion: Overly fearful of losses and pull to avoid losses • Herd Mentality: Suffer from fear of missing out (FOMO)?
Links: