@esmeesmith 9 October 2022

Anchoring Effect in Investment, How does it work Financial investment has a lot of concepts which are not an easy thing to understand. A lot of people just read over them and forget them. I thought why not go ahead and make those concepts simple and then decide to sahre with others over here. I am sure this would make it easier for some folks here to read and learn from it. So today I want to discuss the achoring effect. This effect is pretty common among the beginners who are into the investment of various types. You would surely love their approach. Here I am going to show you how the ancohring effect has some sort of impact on our decision making and what can be done about it.

What is anchoring effect? Sometimes we see something and we instantly believe it. So we don't have control over what are some of the information we are being fed. You notice this in your purchase and the choices. So that effect where you instantly believe in first information in hand is "anchor". This is effect that makes you believe in short information. How does this effect works with Personal finance? In personal finance we all know how the people invest into something just by looking at the investment options. You look at the amount of money to be invested into something. And then you realize that the amount invested decides is based on the first information. Which could be misleading and also some of the time manipulative too. So this type of effect is controlling your money and often you could be wasting in the wrong investment. How to avoid this effect? Stay Firm. You get bombarded with a lot of information and it becomes harder to adjust with that sort of the effect in our life. Some of the time avoiding this effect means you decide to stay firm on your thoughts. Avoid Festive/Sale Discounts. Each month we are being exposed to some sort of the sale or the discount or some investment opportunities. And in order to move ahead in life we have to learn to avoid this effect. Lesson Learned In short, never trust any information in personal finance or investment or anything by first information. Try to get multiple point of views, research and advice.