Avoid bad money decisions

WHAT IS IT THAT DRIVES PEOPLE TO MAKE FINANCIAL MOVES THEY WILL LATER REGRET?

- Hardi Swart

Over the past decade, I have seen investors make terrible financial decisions, often ignoring proper financial advice. I have witnessed people invest their life savings in crypto Ponzi schemes, unregulated investments, and extremely risky ventures. Through these experiences, I have realised that most of these bad decisions are motivated by certain factors.

Here are 10 key reasons why people tend to make poor financial choices:

1. Fear of missing out
One of the strongest drivers of bad financial decisions is the fear of missing out. Whether it's a trendy cryptocurrency or a fast-rising investment, people are often swept up in the hype, wanting to capitalise on a "can't miss" opportunity.

Solution: Take the time to research any investment, no matter how promising it may seem.

2. Overconfidence
Many people believe they know more about investing than they actually do. This overconfidence can lead to poor decisions, such as investing heavily in high-risk assets or neglecting to diversify their portfolio. Investors may also think they can time the market, which often results in losses.

Solution: Recognise your limitations and consult with professionals.