Why do most investors sell profit-making stocks while keeping a tight grip on loss-making ones? Why do investors buy a stock just because other investors are buying the stock? The common belief that humans make rational financial decisions is not true. Emotions such as fear, guilt, greed, etc. result in irrational financial decisions. These emotions and sentiments are reflected in the stock markets through volatility in stock prices.
Behavioural finance helps explain how emotions result in people making irrational financial decisions. Use this interactive to understand how emotions impact your investment decisions so that you can alter your decisions to make them objective and suitable towards building your wealth.
Note: This interactive is primarily relevant to equity investing.
|Assess your attitude towards equity investing|
|Assess your investment risk appetite|