The Role of Behavioral Finance in Investing

How Psychology Affects Investment Decisions

Investors often make irrational choices due to emotions like fear and greed. Behavioral finance explores these tendencies and offers strategies to counteract cognitive biases.

Common Biases in Investing

Herd mentality, overconfidence, and loss aversion influence financial decisions, often leading to poor investment choices. Understanding these biases helps investors make more rational decisions.

Strategies to Overcome Emotional Investing

Setting clear financial goals, maintaining a diversified portfolio, and using systematic investment plans (SIPs) help mitigate the effects of emotional decision-making.

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