In the latest GreyIssue from investment house Allan Gray, they have penned an important piece on investor behaviour which bears reading.
Quoting research from one of my favourite behavioural economists Dan Ariely, they argue that our brains are wired to make the easiest, rather than the best decisions.
“When it comes to investing, we may have very good intentions, but temptation in the form of spending impedes us. We know what the right behaviour is, but knowing is not enough; it does not make us spend less or save more. We need to understand our limitations and remove barriers that we put in place, or that exist due to our environment, and then we need to think about how to add fuel to motivate ourselves and remain committed.”
They give five tips for making better (investment) decisions:
2. Don’t always rely on your gut
3. Narrow your options
4. Sleep on it
5. Ask for a second opinion
It’s not a long article, but it’s a good read. Click here to take a look.