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Five reasons your mind messes with your investments

The human psyche can play tricks on your investing brain. Here are the five most common investment mistakes.
Five reasons your mind messes with your investments

5 mistakes and how to avoid them:

  • Overconfidence
  • Confirmation bias
  • The endowment effect
  • Loss aversion 
  • Outcome bias

Thinking is exhausting work. The brain devours between a fifth and a quarter of the energy used by the entire human body, despite accounting for just 2 to 3 per cent of overall weight. Little wonder it has developed a plethora of short-cuts that enable us to make fast-and-easy decisions that are often very effective. 

However, these sort-cuts are so seductively effortless that we often use them to make decisions that would be much better as a product of slow-and-effortful consideration. Listed below are five aspects of human nature that can prove costly for investors.

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