Episode Details

Citi Wealths report reveals cognitive biases that cost investors dearly. In 2024, the average equity fund investor earned 16.54%, while the S&P 500 soared at 25.02%. The gap, the second widest in a decade, is due to biases like loss aversion, endowment effect, herd mentality, anchoring, confirmation bias, and risk underestimation. These biases lead to impulsive trades and missed opportunities, costing investors up to 15% of potential returns over a decade. Citi suggests solutions: acknowledge biases, write an investment policy statement, automate contributions, and consult a fiduciary advisor. Building bias-proof habits can help investors achieve returns closer to the markets true potential.

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