FEATURE: RETIREMENT
Those who behave, save
Knee-jerk reactions have a detrimental, long-term effect on retirement savings
Investor behaviour, or misbehaviour, is a topic on which numerous books have been written; probably without much success in discerning what drives sometimes incomprehensible decisions, writes Johann Barnard
Buy low, sell high is as simple a mantra as one could imagine, except the evidence often points to the exact opposite happening. These knee-jerk reactions often have detrimental, long-term effects on investors’ retirement savings portfolios. "People react to certain events after they’ve happened rather than planning for them," says Richard Carter of Allan Gray. "So we’ve seen people wanting to take their money overseas after the rand has crashed and there are endless examples of people reacting after, rather than preparing for what might happen. "That is the fundamental investor behaviour conundrum that in aggregate you can’t fix. But an individual can say I’m not going to invest according to the noise and follow the trend, I’m going to do my planning, make my decisions and stick to them. "If investors do that, they’ll get a better outcome in the long term. That investor behaviour you see over every time period — it’s just the way we behave." This is incredibly frustrating for money...
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