HOW TO BE AN INVESTMENT BOSS

For me, the fear of losing $50 is far greater than the joy of winning $50. It probably explains why I don’t gamble. Why am I so afraid of losing money? Well, it all comes down to what behavioural economists call loss aversion, when losses loom larger than gains. It’s also the reason most of us tend to remember price increases rather than price decreases.

While loss aversion is a natural protective human behaviour, it can sometimes be to our detriment. It may end up influencing our decisions so much that we miss out on potential gains. Let’s say, for example, that you’re afraid to invest in the sharemarket because you are worried about losing all your