Loss-Aversion Bias Overconfidence Bias Overconfidence bias is a bias in which people demonstrate unwarranted faith in their own abilities. Overconfidence may be intensified when combined with self-attribution bias, in which people take too much credit for successes (self-enhancing) and assign responsibility to others for failures (self-protecting). Overconfidence has aspects of both cognitive and emotional errors but is…
Belief Perseverance Biases Belief perseverance biases result from the mental discomfort that occurs when new information conflicts with previously held beliefs or cognitions, known as cognitive dissonance. Conservatism Bias Conservatism bias is a belief perseverance bias in which people maintain their prior views or forecasts by inadequately incorporating new, conflicting information.
Liquidity Requirements Time Horizon Tax Concerns Legal and Regulatory Factors
Portfolio planning can be defined as a program developed in advance of constructing a portfolio that is expected to define the client’s investment objectives. The written document governing this process is the investment policy statement (IPS). The IPS is sometimes complemented by a document outlining policy on responsible investing—the broadest (umbrella) term used to describe principles…
