Lesson 5 of 8
Common behavioural mistakes
6 min read
Most poor investment outcomes are behavioural, not analytical. The behaviour gap - the difference between what funds returned and what their investors actually earned - is caused almost entirely by buying and selling at the wrong times.
The recurring mistakes
1. Performance chasing. Buying whatever topped the charts last year. Recent outperformance is a weak predictor of future outperformance, and often the opposite. 2. Panic selling. Converting a temporary fall into a permanent loss, then waiting for "clarity" that only arrives after prices have recovered. 3. Over-trading. Every trade costs money and each decision is another chance to be wrong. 4. Concentration. Putting a life-changing amount into one company, one sector or one token because the story is compelling. 5. Leverage. Borrowing to invest turns a survivable fall into a forced sale. 6. Ignoring costs and tax, which are the two returns you can actually control.
Why the stories mislead
Survivorship bias means you hear about the person who bought early and held; you do not hear from the far larger number who bought the same thing later and lost. Social media amplifies the winners exclusively. Anyone promising certainty, guaranteed returns or urgent, time-limited opportunities is describing a marketing funnel, not an investment.
Scams and pressure
Real investments do not require you to act today. Pressure, secrecy, "guaranteed" returns, unregulated platforms and unsolicited approaches are the standard markers of fraud. Check the regulator's register in your country before sending money anywhere.
The boring plan that works
Decide an allocation, invest regularly, keep costs low, rebalance annually, ignore forecasts, and review once a year rather than once a day. Nothing about this is clever, which is precisely why it survives contact with real markets.
mySal Academy is education, not financial advice. It cannot recommend investments.
Key terms
- Performance chasing
- Buying whatever has recently risen most - a reliably poor strategy.
- Behaviour gap
- The difference between fund returns and what investors actually earn, caused by badly timed moves.
- Survivorship bias
- Only hearing about winners, which makes success look far more common than it is.
- FOMO
- Fear of missing out - the emotion behind most late, expensive entries.
Quick check
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Homework
0/3 doneThree small jobs. They take minutes and they're what makes the lesson stick.
- 1
Make it personal
In two sentences, write what "Common behavioural mistakes" changes about how you handle your money this month.
- 2
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Teach it back
Explain the main idea of this lesson in plain English, as if to a friend. Write the explanation you would give.
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Get started freemySal Academy is financial education, not financial advice. It explains how things work in general terms — it can't recommend products, investments or what you personally should do. For advice about your own situation, speak to a qualified adviser or your local tax authority.