Experience is a powerful and often unforgiving teacher.
Over time, investors build knowledge, resilience, and perspective. Yet with this wisdom also comes the potential for blind spots.
As we age, subtle behavioural biases can quietly influence our decisions – sometimes helping, but often hindering long-term outcomes.
Recognising these biases isn’t about pointing out flaws. More about understanding the human side of investing and making choices that stay aligned with retirement goals and legacy plans.
Why Biases Matter More With Age
Think of investing like steering a ship.
In our younger years, there’s more time to correct course after a wrong turn. Later in life, the horizon is closer, and every decision counts more.
Mistakes can’t always be undone with time alone, and emotions often play a stronger role when wealth is tied to lifestyle and family legacy.
Biases matter more because they can nudge decisions in directions that feel comfortable – but may not be right for long-term security.
Loss Aversion: Playing It Too Safe
Losses sting twice as much as gains delight – psychologists call this loss aversion.
For older investors, this can mean leaning too heavily towards “safety.”
Imagine keeping all your savings in cash under the mattress. It feels secure, but inflation quietly erodes its value.
Similarly, an overly cautious portfolio may protect capital in the short term but fail to deliver the growth needed to sustain retirement.
Balance is key: preserving wealth while still allowing it to grow.
Overconfidence: “I Know What Works”
Years of experience can often bring confidence, but sometimes, it can be too much.
This overconfidence bias leads investors to believe their judgement is sharper than it really is.
Think of it like a driver who’s taken the same road for decades, convinced they can’t get lost, even though the road has changed.
In investing, this may mean clinging to strategies that worked in the past, but ignoring today’s risks or opportunities.
An external perspective, provided by a trusted adviser, can help challenge assumptions and identify blind spots.
Familiarity & Anchoring Bias: Sticking With the Known
As humans, there is no doubt that we are creatures of habit.
This is where familiarity bias comes in, nudging us towards what feels safe: familiar companies, home markets, or asset classes.
Anchoring bias ties us to past reference points – like holding on to an investment because “it was once worth more.”
It’s the equivalent of keeping an old coat in the wardrobe because you remember what it cost, even though you never wear it.
Ultimately, true financial resilience comes from diversification, not from clinging to what feels familiar.
Regret Avoidance: Fear of the “What If”
As we get older, the fear of making a costly mistake can sometimes outweigh the potential benefits of action.
Regret avoidance bias makes investors hesitate, preferring inaction over the risk of future regret.
Yet inaction can be its own risk – like leaving a garden untended, only to find weeds have quietly taken over.
Structured reviews and steady advice can replace hesitation with confidence, keeping investments aligned with today’s needs.
A Balanced Perspective
When we look at the broader topic of behavioural biases, they are all part of being human.
They don’t disappear with age; in fact, they can grow stronger. But awareness is the first step in reducing their impact.
By recognising these natural tendencies and working with an adviser who provides objective guidance, investors can maintain a balanced approach to their financial decisions.
The goal is not to remove emotion entirely, but to ensure it supports, rather than undermines, the long-term journey.
Thinking about your own decisions?
A conversation with a trusted adviser can help you explore whether behavioural biases are shaping your choices – and ensure your wealth continues to support both your lifestyle and legacy.
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