It’s generally known that personal biases exist in us all which can lead us into an emotional state where we could become vulnerable when making sound financial decisions. It is fair to say that the last 12 months has created a backdrop of uncertainty; events such as Brexit and Coronavirus has impacted our emotions and generated a shift in people’s underlying moods. Behavioural finance studies show how emotions can drive certain reactions, such as:
Momentum can charge this emotional behaviour further; it is reported that often 40% of new money invested in mutual funds each year is directed towards the previous year’s top performing funds. This is one example of how herd mentality can lead to buying at investment peaks. Conversely, we have witnessed how media hype can trigger fear or induce a sense of gloom, causing people to sell during market downturns.
As advisers, understanding an individual’s attitude towards investment risk is therefore essential, as this determines how comfortable a client is with investment fluctuations. In turn, this ensures that investors do not panic during uncertain times and remain on course with their financial plan.
Tideway are here to help guide investors through these tough times; our discretionary investment management service offers extensive experience in the industry together with access to cost effective investment solutions. Importantly we take away the burden of researching the market place and making the necessary investment decisions, thus taking the emotion out of the financial process.
Tideway specialise in providing retirement advice, offering each client their own dedicated Wealth Manager who is responsible for formulating a bespoke plan within an appropriate investment strategy and risk profile.
We offer free retirement Guidance Sessions to help with planning for the years ahead. If you or someone you know wishes to take advantage of this service, please book a session.