Investor behaviour: control what is possible
06 Mar 2021 - Contact Sayan Sircar
1 min read
While investing, focus on those important things that you can control.
It is interesting to observe investor behaviour in the field of personal finance. People generally are focused on more minor, mainly operational aspects of investing. They give less attention to strategic actions that have more impact on achieving their investment goals.
Here is the view
This essentially means that there are important things and those we can control:
- Setting goals and having the proper asset allocation
- Automated investing based on investment plan
- Regular review and rebalancing
- Choosing low-cost index funds over high-cost active funds
- Having an emergency fund
- Using a sinking fund for regular but large expenses like insurance payments
Contrast this with things that are easy to worry about but may not be as important:
- Having unrealistic return expectations leading to either saving too little or taking unnecessary risks: handle this via asset allocation and review and choose the right assets for a goal
- Timing the market or waiting for the right time to enter / exit: stick to your plan and rebalance in case of asset weights deviating from the target
- Looking for the best fund or stocks: invest instead in diversified funds that have low costs like this
- Investing solely to save tax: evaluate if the investment is suitable for your goals
- and many more
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