Investors go through the whole gamut of emotions when they enter the stock market.
The daily fluctuations can elicit a wide range of feelings ranging from greed to abject fear.
The reason for this is simple: any activity that involves money (be it the potential gain or loss) will be unavoidably emotional.
That is why investing is not just about cold, logical analysis. When there is a significant amount of money at stake, you also need to manage your emotions when you invest.
As you slowly build up your retirement funds, it’s important to be aware of these emotional tripwires so that you do not inadvertently end up sabotaging yourself.
Let’s start off with three common psychological biases that frequently get investors in trouble.
Hindsight Bias
Hindsight bias causes us to think that an event’s outcome was obvious, even though the outcome was far from clear at that moment of time....