The Psychology of Investing

We all like to think we're rational when it comes to money, but the truth is, our brains can be our own worst enemy when making investment decisions. In this episode of clarityON, Investment Director Glyn Bolton and Investment Manager David Eve explore the fascinating world of behavioural finance and reveal how psychological biases cost investors dearly - sometimes to the tune of hundreds of thousands of pounds over a lifetime.What we cover:The bias blind spot: Why even experienced investment professionals aren't immune to cognitive biases, and how Morningstar's research shows that high bias levels can cost investors 1.5% per year in returns.Loss aversion: Why we feel losses 2.5 times more strongly than gains, and how this leads us to hold onto bad investments while selling winners too early.FOMO and herding behaviour: From the dot-com bubble to Bitcoin and Nvidia, why buying what "everyone else" is investing in usually means you're buying near the top.Overconfidence: The Dunning-Kruger effect in action—why the most overconfident investors rarely recognise they have a problem, and how even professional fund managers fall into this trap.Action bias: Why doing nothing is often the smartest move, and how missing just the 10 best days in the market can cut your returns in half.The real cost: How behavioural mistakes can mean the difference between retiring with £450,000 or £750,000—a £300,000 gap caused by emotions rather than market performance.The value of advice: Why Royal London's research shows advised individuals accumulate 23% more wealth, and how behavioural coaching accounts for half of the value a financial adviser provides.Glyn and David share real-world examples, debunk common investment myths, and provide a practical "red flag checklist" to help you spot when your biases are influencing your decisions.Whether you're a seasoned investor or just starting out, this episode will help you understand the psychological traps that derail even the smartest people—and how to avoid them.Need help managing your investment psychology? Book your free consultation or email [email protected] WebsiteBook Your Free Consultation InstagramLinkedInFacebookYouTubePerformance Disclaimer:Past performance is not an indication of future performance. The value of your investments can go down as well as up.Legal Disclaimer:Please note that any opinions, analyses, or reviews provided on the podcast are those of the author alone.All content reflects our opinion at a given time and can change as time progresses. All information should be taken as opinion and therefore should not be misconstrued for professional or legal financial advice.clarity makes no representations as to accuracy, completeness, or suitability of any information and will not be liable for any errors, or omissions in this information.Please contact your financial adviser if you require further support or assistance with any of the topics raised.