Selling a loss-making investment can be difficult. Many investors continue to hold on, hoping things will improve. The hesitation comes from a very human tendency of not wanting to admit defeat. When we see red numbers in our portfolio, letting go can feel like that. And, so, we sometimes end up keeping bad investments for far longer than we otherwise might.

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Whether we know it or not, each of us carries a story about money in our mind. This story is shaped by what we saw while growing up, the advice we received from family, and our personal wins and losses. Some people see money as safety, while others see it as freedom. These personal finance stories guide many of our daily choices, from small purchases to long-term investing. The way we think about money reflects our money mindset, which greatly influences how we spend, save, and invest.

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Who doesn’t love a good deal! Whether we’re shopping for groceries or making a purchase during the festive season, a discount makes many of us happy. This tendency is both natural and common. But, when it comes to investing, the same mindset may sometimes work against us.

Let’s understand why discounts attract us so strongly, how they shape our investing psychology, and how to avoid traps when making financial decisions.

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Whether we know it or not, our money decisions are closely linked with feelings of pride, fear, hope and regret. Investing, in particular, can bring out intense emotions because it involves the potential for both risk and reward. This is why emotional investing is a common experience for most people. While emotions cannot be removed – they’re a healthy part of being human, after all – it is important to understand they may affect investment decisions negatively and how we can manage them to mitigate their impact on money matters.

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Imagine flipping a coin five times, and each time it lands on heads. At this point, many people start feeling that tails is now “due”. The mind believes that the next flip must balance things out. This belief is natural but not rational. Each flip is an independent event and the coin does not remember the past. Similarly, investors often believe that after a series of losses, a win is due. This is how gambler’s fallacy shows up in investing. It shapes decisions in ways that feel logical in the moment, but actually rest on shaky ground.

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Despite popular belief, money decisions are often influenced by more than just facts and figures. Emotions play a strong role in shaping how we spend, save and invest our money. FOMO, or the fear of missing out, plays a big role in this context. In the world of investing, stock market FOMO can push people to act quickly without much thought, only because everyone else seems to be making money. Understanding FOMO investing and learning how to manage it can help investors take more balanced money decisions.

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Most of us want to save more, but daily expenses and small temptations can often get in the way. Even when we set goals, it can be difficult to stick to them month after month. One way to make saving easier is to remove decision-making from the equation. When we let systems take over, we can save without thinking too much about it.

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Most people understand that saving money is important. However, when faced with the choice between spending today and saving for tomorrow, many of us end up choosing today. A new phone, a short holiday, or a dinner out feels rewarding in the moment. Saving for retirement, on the other hand, feels distant and therefore less exciting. You may wonder, why is saving so hard? The answer lies in the human tendency to value immediate gains over future potential benefits. This tendency is called present bias.

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