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The importance of long-term investing

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Challenging market environments can create situations which can lead to some biased decision making. Recognising this will prevent investors from making decisions that could negatively impact their long-term investment performance.

How behavioural biases affect investment decisions

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The reason long-term investors like Warren Buffett can consistently earn profits and outperform is because of market inefficiencies. These inefficiencies are inevitable because markets are composed of human beings, who no matter how disciplined, will often make financial decisions that consist of behavioural biases causing them to act on emotion.

What is fiscal drag?

Simply put, it is the effect that the freeze on income tax rates and bands has on real earnings. When tax bands or tax allowances do not rise along with inflation or the cost of living, you may find that you inadvertently pay more income tax.