22 Mar 2022
Can behavioural finance make you a better investor?
Investec Wealth & Investment's Neil Urmson gives content editor Patrick Lawlor practical examples on harnessing the concepts of behavioural finance to make better investment decisions.
Behavioural finance has become a more mainstream branch of economics, as shown by the recent award of the Nobel Prize in economics, to Richard Thaler, for his work in the field. But what are some of the practical ways we can draw on behavioural finance to make better investment decisions?
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Using behavioural finance for investing
Use the time codes below to skip to topics of interest:
00:44: Identifying emotional pitfalls in investment decision-making and avoiding them, with some practical examples
04:55: The importance of a good relationship between client and wealth manager
06:50: The risk of overconfidence. Discerning luck from skill
08:45: How behavioural finance is now mainstream – and why traditional economic theory is still relevant
Understanding our behavioural patterns and the pitfalls we often fall into can help us make better decisions in life, including those of investments.
Recognising our faults is one thing, but avoiding them can be more difficult and here the help of a good adviser can make all of the difference.
Drawing on years of experience in wealth management, Neil Urmson provides some practical examples of how a skilled professional can guide investors in the right direction.
He touches on overcoming emotions like fear and overconfidence, as well as the importance of patience in making good investment returns over time.
Finally, he argues for the importance of incorporating the best of traditional and behavioural economic thinking in managing investments.