Finance and Investments

So what is the key to financial success? To make wise decisions you must have the right information, and combine and weigh its various components correctly. You must not ignore valid information in favour of thinking and judgemental tendencies that are dangerous in the investment world; for example, weighting the most vivid and recent information more strongly than heeding the lessons of history. Investors must develop a mindset that helps them understand and adapt to the financial environment. Money is an emotional currency that relates to our individual need for security, power, respect, love, esteem and self-determination. If you don’t know who you are, the investment world can be the most expensive place to learn. The psychic conflict between the temptation of profit and fear of loss makes investing a dangerous game for many people.

To change our financial behaviour we must learn new skills, moulding the knowledge of behavioural finance and neuroscience. Investors must focus on imperatives such as motivation, knowledge and understanding, wisdom and discipline – the focus is not on how to pick shares, get rich in the property market or get rich quick – the focus is on the psychology of investor success.