How to avoid ‘wealth killing’ behaviours in 2026

Richard Watkins, certified financial planner with Continuum (right)placeholder image
Richard Watkins, certified financial planner with Continuum (right) | Supplied

There are 10 behaviours that investors need to guard against when they are making investment plans for next year, according to Richard Watkins, certified financial planner with Continuum, a financial advice firm.

These “wealth killing” behaviours are:

1 Present bias

The inclination to choose immediate rewards at the expense of long-term rewards. Given the choice of £5,000 now or £100 a month for 10 years, most people would take the former.

2 Herding

Mimicking large groups, following the crowd without proper research and understanding fully what you are doing. The “fear of missing out” mind set – impulse buying of a share because everybody else is.

3 Framing

Making a decision based on how it is presented to you. “This treatment has a 90 per cent success rate” or “this treatment has a 10 per cent failure rate”. Which would you choose to act on?

4 Loss aversion

Unwilling to take risk as the pain of any loss (even perceived loss) is felt twice as much as joy of gain.

5 Disposition effect

Investors will hold on to losses for too long and encash gains far too early. Holding on to a loss-making investment increases your risk profile as the chance of recovery decreases over time as the loss increases.

6 Endowment effect

We overvalue something we own, regardless of its market value. A person selling a used car will put a higher than market value on it due to sentimental attachment, the amount spent on it and the pleasure it has provided.

7 Confirmation bias

Tendency to favour information that confirms existing beliefs and ignore evidence that challenges them. We recall information selectively and are blind to anything we simply do not wish to read. Social media algorithms will display more of what you have clicked on, increasing polarisation.

8 Probability neglect

We disregard probability when making decisions where the outcome is uncertain. For example, expecting markets to rise forever (they certainly will not) or having a £10 bet on a 100-1 outsider at the races.

9 Mental accounting

We assign subjective value to money and spend it according to different rules, depending on how we acquired it. For example, if you won or were given £100,000 what would you do? Repay your debts? Make a pension contribution and top up your ISAs (the intelligent thing to do over time)? Or would you redo the kitchen, buy a car, and go to Bora Bora for a month?

10 Overconfidence in the quality of information

For example, a share tip from a mate in the pub. Proper research is a key to understanding and building confidence.

Comments

 0 comments

Want to join the conversation? Please or to comment on this article.

Dare to be Honest
Follow us
© 2026 Iconic Media Group Ltd. All rights reserved.Cookie SettingsTerms and ConditionsPrivacy notice