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We like to think we invest rationally, but the field of behavioural finance has shown there are social, emotional, and even cognitive factors that can affect our investing decisions. Watch the videos below to help you become aware of these unconscious tendencies, and have a better chance of meeting your long-term investing goals.
Our thinking is greatly influenced by what is personally most relevant, recent or dramatic. The 2008 financial crisis continues to be at the forefront of many investors’ minds, but a focus on past losses can keep you from seeing the opportunities ahead.
Is loss aversion keeping you out of the stock markets?
Herding is the idea that people are more comfortable investing their money in the same way as the majority of others at any given time. Unfortunately, when it comes to investing, herd mentality may significantly impact long-term results.
Are you investing to meet your own goals or just following the crowd?
If you could build the ultimate football team, chances are you would choose the best players from around the world rather than just from Denmark. Likewise, when investing, it makes sense to look outside Denmark.
Is supporting the home team costing you money?
Hitting a golf ball into the water can feel twice as bad as hitting it safely on to the green, so golfers will often look for a safer option - even at the cost of adding strokes to their round. Likewise, volatile markets can tempt investors to avoid risk rather than face the possibility of a loss.
Is loss aversion making you lose sight of your long-term goals?
The videos above on behavioural finance provide some insight on the factors that can influence your investment decisions.
When it comes to considering your investment goals, Franklin Templeton Investments has a range of funds which take a long term view, leveraging disciplined, time-tested strategies and assessing risk as thoroughly as they seek reward.