Applying Behavioral Finance in Your Financial Planning Practice by Pauline Yong

Research in psychology has documented a range of decision-making behavior’s called biases. These biases can affect all types of decision-making, particularly in money and investing. The biases relate to how we process information to reach decisions and the preferences we have. The biases tend to sit deep within our psyche and may serve us well in certain circumstances. However, in investment, they may lead us to unhelpful or even hurtful decisions. As a fundamental part of human nature, these biases affect all types of investors, both professional and private. However, if we understand them and their effects, we may be able to reduce their influence and learn to work around them.

Learning Outcome