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–> Asset Allocation helps overcome emotional attachment to inherited assets.1. Each asset class has a different Return-Risk-Liquidity profile2. Diversification is needed to achieve optimal balance between rewards and risks3. Asset allocation decision is the most important factor for long-term wealth building4. There is no “ one size fits all “…

It shows how individuals separate their budget into different accounts for specific purposes.Mental Accounting and Investments:Example 1 : People also tend to experience mental accounting bias in investing. When it comes to investing, mental accounting can also cause people to make illogical decisions.Investors invest their wealth based on the source…

# Herd Mentality : Humans, by their nature, are socially inclined and have fear of being left out. This same fear is applicable to investing. Investors tend to follow market trends blindly and invest in fear of being left out, without checking their relevance with their financial goals.This bias is…