Evolutionary Psychology and Investing

Investing is hard for a reason. Our brains evolved to survive in a wild environment where money did not exist. Our instincts are not wired for wise spending, saving, or investing. For example, our brains are designed to focus on immediate returns, making it difficult to think long-term for investment portfolios. Additionally, our brains are more inclined to process and make decisions based on stories rather than numbers and probabilities. We are also prone to herd behavior, seeking safety in numbers even in modern capital markets. Understanding the influence of evolutionary psychology helps us navigate the challenges of investing.