“What’s the biggest threat to achieving financial independence? Your own brain!”
Nobel-winning prize theory and research from psychologists (Kanheman & Tversky) led to the beginnings of what is now called behavioral finance, with Thaler bringing that into the mainstream. The basis in “rational” vs. “irrational” behavior and analysis could not be more important – “that human reason left to its own devices is apt to engage in a number of fallacies and systematic errors so if we want to make better decisions in our personal lives and as a society, we ought to be aware of these biases and seek workarounds”.
So while you can invest in all the right things, as the infographic highlights , if you fail to master your own psychology, it’s still possible to fall victim to financial self-sabotage. Visual Capitalist makes some great points out, including that “failing to plan is planning to fail”.
SmartStops is here to help you plan, monitor and protect your investments properly – to help you avoid the mistakes and traps that can hurt your returns.