How to Avoid Emotional Investing Mistakes

To be a successful investor in the long term, it’s critical to overcome biases that can lead to poor investment decisions. Here are three of the big ones.

1. Action Bias. Humans are primed for action. It makes us feel in control, especially in uncertain times. However, sometimes immediate action is the wrong move — especially when it’s driven by emotional reactions or gut decisions.
2. Recency Effect. We tend to remember recent events more clearly, so we give them more weight when making decisions for potential future events.
3. Confirmation Bias. We love being right, and hate being wrong — so much so that our brain tricks us to being more receptive to information that confirms what we already believe and resists counter or outside perspectives.

Unfortunately these are not the only behavioral mistakes that investors can make. If you want to learn more, or set yourself up for investing success, schedule a complimentary call with our financial advisors.