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Suman Meghwal
Wealthseeker • 3m
Behavioral Finance examines how emotions and biases affect financial decisions, leading to irrational behavior. Unlike traditional finance, it acknowledges that people often make decisions influenced by psychology. Key points include: 1. Loss Aversion: People fear losses more than they enjoy gains, leading to poor investment choices. Recognizing this can help you stay calm during market dips. 2. Overconfidence: Believing you can predict market trends often leads to risky behavior. Understanding this can help you focus on long-term, diversified investments. 3. Anchoring: Relying too much on initial information (like purchase price) can cloud judgment. Being aware of this helps you make objective decisions. By understanding these biases, you can improve your financial decisions and focus on long-term growth.
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