Large numbers tend to scare us, we can’t process them mentally. We are more comfortable with smaller ones. This in essence is the denomination effect. Of the several cognitive biases that affect us as individuals, Denomination Effect is an important one. It comes in our way everywhere – buying a phone, property or even mutual […]
Mutual Fund returns – Let me remind you about inflation and your bias
“How much returns to expect from mutual funds” is every investor’s question. A lot of popular media stories bait you with stories of Top 5 or Top 10 best mutual funds, highest performing mutual funds. Beware. These lists based on mutual fund returns, if followed blindly, can do more harm than good. Today, I am […]
The biggest enemy of your investments is…
In times like these, when everyone is bullish and feeding on excesses (even Twitter decided to move towards excess of 240 chars), here is a set of some earlier 140 chars, which make one hell of a read. You see, the biggest enemy of your investments is… …you. And it inflicts the damage by twisting […]
Stuck in the absolute – How bias affects our decisions?
I have been having a recent email exchange with a Unovestor. I was persuading him to consider more reasonable returns from his investments. His comments: “If I cannot expect even 15 to 18% returns from equity or mutual funds then what is the point of investing in them. Even real estate investment held over long periods of time […]