1.) Investment Lessons are Timeless!
Have you ever thought of a retirement life without investment?
Definitely, it is hard to imagine a retirement life without any safe investments to fall back on.
This is why your investment portfolio carries great importance not only for your retired life but also for other aspects of your life in many ways.
We live in a world where tomorrow’s circumstances have always been unpredictable. That is why we need to prepare ourselves to face any circumstances.
So it is always important for us to take the right decision regarding our Finances and Investments.
“Knowing other successful investors is wisdom;
Knowing the investor in you is enlightenment.”
Hear what our Investment Expert Usha has to say about the investment process with an example of a case study.
2.) Why do Investors Always Underperform the Market?
Now you know exactly what investment is all about. But, now there will be a question of why most investors are not able to get maximum return from their investments.
The answer to this is that most investors underperform and get less than the market return.
“Market is always about gain and pain”
The reason why the investor return is less than the investment return is simply due to Return Gap.
“Don’t focus on beating the market;
Focus on controlling your behaviour.
Work on having Strong conviction and extreme patience.”
Personal Finance is more personal and less finance.
To get answers to the questions below:
- How investment helps you beat inflation?
- What is the term Return gap refers to in investment?
- How does the Return gap affect our return on investment?
Listen to what our Investment Expert Usha has to say regarding the concerns around investment.
3.) The Emotional Psychology Behind Investing and Investment Bias
In the previous video, you were taught what Return Gap is and how it affects our return negatively on Investment. Now let’s see what factors that lead us to this Return gap.
The primary reason for this Return gap is due to the Emotional Psychology involved in making our Investment choices.
So what is Emotional Psychology and why is it given so much importance?
We as human beings do not always only take rational decisions. But there are some factors like psychology, emotions, and irrationality which has an indirect effect on our rational thinking.
This is the reason why is it important for us to know how our brain works as it helps us take the right financial decisions.
“Market correction doesn’t destroy long-term wealth.
Your reaction to it can destroy long-term wealth.”
What do you mean by biases in Investment?
Do take guidance from our Investment Expert Usha to not let your psychological factors influence your financial decision.
The below video will help you clearly understand the concept of Emotional Psychology with examples from real-life case studies.
4.) Why Averages Are Dangerous And Misleading To Investors?
Now you are aware of how emotional psychology influences our financial decision very negatively. Now let us look at some other factors that lead us to this Return gap.
The concept of calculating averages is used widely across various domains for different needs and purposes. Similarly, averages help investors get valuable sources of information.
Then why do we say averages are dangerous and misleading to Investors?
If you go by averages in the bank then it would be easy for you to calculate the amount exactly for a specific period. But the same process does not apply to our Investments in the Stock Market.
The reason being your savings in the bank remains stable whereas your investment in stocks will not remain stable over a period due to the fluctuation in the value of the stock you have purchased.
“Don’t compare your financial-life to others’.
You have no idea what their financial-journey is all about.”
To become more familiar with the concept of averages in investment listen to our Investment Expert Usha and clarify all your doubts regarding averages in Investment.
5.) Does more action add more real value?
So, now you have learned how calculating averages can be misleading to investors to take the right decision. It’s now time to know another interesting trait that leads us to the Return gap i.e., being too much proactive.
Let’s see what are they? And how does it influence our Financial decisions?
It is always good to be active in life. Being active in life helps, we progress in life effectively. Similarly, being active in our investments helps us gain higher returns.
“A question to ponder over:
Is your portfolio a product of circumstances?
Or is it a product of your conscious decisions?”
Is there a problem with being too active in your investment process?
Yes, there is.
Watch the video below to see what our Financial Expert has to say about how being too active could affect our Investment Return negatively.
You will also get insights on how to not let the market fluctuation influence your financial decisions and when should we take an action.
6.)Narrative Investing VS Number Investing:
Now we are aware of how being too proactive can also lead to negative impact on our investments.
Now it is time to know what circumstances or situations will tempt us to be proactive in the market.
Before buying a stock, on what parameters do you choose the best stock for YOU?
This is where the topic of Narrative Investment VS Number Investment comes into consideration.
We buy stocks based on the data and information that we have collected so far. The data and information can be in many forms.
Narration is a prominent form that has a significant influence on our financial decisions.
Do your homework to find the facts and reasoning before investing.
Don’t get carried away by the public-opinion or expert-opinion.
To get a clear understanding of this topic. Watch the video below, where our Investment Expert Usha assists you with taking the Right Financial Decision.
7.) Investment Trap VS Survivorship Bias:
Our previous lesson was about how not to get misled by hearing about narrative investment and take wrong decisions.
In this video mentioned below, we are going to learn about other factors that could lead to Investment Trap.
Let us take an example, suppose you have an opinion on a certain matter or a concern. Then your opinions could change after what others have to say about the same.
Similarly, the same concept can be applied to your investments, where the opinion of others and market correction has a significant influence on our decision-making.
“Have the right amount of patience during the bear market.
Have the right attitude during the bull market.”
To get answers to the below:
- How can successful business stories mislead us to take the wrong action in our investment process?
- Why is it important to choose the right time for investing?
- What are the proper ways to react to the noises in the market and the headlines?
In the following video, our Investment Expert Usha helps you get better clarification on the topic of Investment Trap VS Survivorship Bias with real-life examples.
8.) Tips for Investors to overcome Behavioural Bias?
Now we are aware of the factors that lead us to Behavioural Bias.
Now let us discuss what steps, to be taken to overcome Behavioural Bias.
By now, we have come to a point in understanding how behavioural bias can affect our financial journey in so many ways.
So now we need to know how to overcome behavioural bias in our financial journey.
It is really hard for us as human beings to not feel biased about anything. Because being biased is so natural to human beings but only its extent could vary from person to person.
“Focus on facts and reasoning
And not on media views;
Expert views or insider views.”
You as an investor would have doubts like:
- How to overcome Behavioural Bias as an investor?
- What are the ways to safeguard ourself from the unfavourable financial decision?
- How to make our financial journey less biased and more beneficial?
Watch this video below to get your questions answered:
If you have any comments or questions, write them in the comment box below.
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