The Hidden Role of Cognitive Biases in Investment Outcomes
Have you ever wondered why even smart investors make costly mistakes?
The answer often lies not in the markets—but in human behaviour.
Investing isn’t just about numbers and charts. It’s deeply emotional.
The human brain prefers simplicity, certainty, and quick answers.
While this helps in daily life, it can quietly derail financial decisions.
Let’s look at a few common thinking traps.
Anchoring Bias: Focusing on Just One Number
When markets feel confusing, many investors latch onto a single familiar detail—
last year’s returns, a trending stock, or advice from a friend.
This habit, known as anchoring bias, narrows perspective and causes
investors to ignore the bigger picture.
Recency Bias: When Recent Winners Feel “Safe”
We naturally assume that what has worked recently will continue to work.
This creates a false sense of certainty and encourages pattern-hunting,
even when no real pattern exists.
Markets don’t follow fixed scripts, and past success does not guarantee
future results.
Emotional Timing: Fear and Excitement Take Control
Fear during market declines and excitement during rallies often overpower logic.
This is another form of recency bias—giving excessive importance to
recent events instead of long-term fundamentals.
The result? Delayed decisions, panic selling, or buying at the wrong time.
What Actually Helps
Awareness. A clear plan. And discipline.
Investors who focus on long-term goals instead of short-term noise are far better
equipped to remain calm, consistent, and rational—even during volatile markets.
(Contributed by Neeraj Kumar, Relationship Manager, HNI Desk 1, Hum Fauji Initiatives)
Beyond Resolutions: The 2026 Guide to Long-Term Financial Success
Every new year begins with resolutions—but real financial progress does not come
from promises. It comes from habits.
Quiet, consistent habits that work in the background while life moves on.
As 2026 begins, the focus should shift away from quick wins and bold bets toward
building a stable, long-term financial foundation.
Core Personal Finance Rules for 2026 and Beyond
- Start with Asset Allocation: Spread investments across equity,
debt, gold, and other assets based on goals and risk comfort. This balance
smooths volatility over time. - Build and Protect an Emergency Fund: Keep 3–6 months of expenses
in safe, liquid instruments before chasing higher returns. - Stay Disciplined Through Market Cycles: Markets rise and fall—
emotions don’t need to. SIPs help maintain consistency and harness compounding. - Don’t Chase Last Year’s Winners: Past performance—whether in
equity, gold, or any asset—does not guarantee future success. - Align Investments with Clear Goals: Every investment should
serve a purpose—education, home, retirement, or wealth creation.
Understand taxes—but don’t let them drive decisions.
And remember: insurance is protection, not an investment.
2026 isn’t about bold financial moves—it’s about doing the right things consistently.
When patience meets discipline, wealth creation becomes inevitable.
(Contributed by Bhawana Bhandari, Financial Planner, HNI Desk, Hum Fauji Initiatives)
RBI’s New Rules in 2026: What Will Change for Banks and Customers
Banking in India is set to become more customer-friendly.
In 2026, the Reserve Bank of India (RBI) is introducing regulatory changes aimed at
strengthening the system while improving everyday banking experiences.
Key Changes You Should Know
- Faster Credit Score Updates: Credit scores will now be updated
every seven days instead of monthly, allowing positive repayment behaviour to
reflect quickly. - Relief for Loan Borrowers: Foreclosure and prepayment charges on
floating-rate loans—home, personal, education, and auto—have been removed. - Stronger Protection for Failed Transactions: If cash is not
received despite a debit, banks must reverse the amount within five working days
or pay compensation of ₹100 per day. - Greater Flexibility: Gold loan repayment periods extended from
180 days to 270 days, offering relief to borrowers and jewellers. - Improved Nomination Rules: Customers can add up to four nominees
for bank accounts and lockers.
Borrowers with good credit scores can also request interest rate reductions even
before completing three years of repayment.
Overall, these changes make banking safer, fairer, and more flexible—giving customers
greater confidence and control over their finances.
(Contributed by Yogesh Gola, Relationship Manager, Advisory Desk, Hum Fauji Initiatives)
What Our Clients Asked Us in the Last 7 Days
Question
I’ve been investing through SIPs for the past 3–4 years. Returns are positive, but the
absolute amount feels small. SIPs seem ineffective—should I continue?
Our Reply
This feeling is natural—and it often appears just before SIPs start doing their real work.
SIPs are not designed for quick excitement. They are built for long journeys.
Think of them as a long-distance train, not a sprint.
What’s Actually Happening
- Early Years Build the Base: In the first 3–5 years, most portfolio
value comes from contributions. Compounding is just warming up. - Compounding Is Exponential: A large portion of total wealth is
created in the later years—often the final 5–7 years. - Volatility Helps SIPs: Market ups and downs allow accumulation of
more units at lower prices. - Increase SIPs—Don’t Abandon Them: If income has grown, stepping up
contributions is more powerful than changing strategy.
In short, SIPs are not ineffective—they are incomplete without time and discipline.
Stopping early is like quitting a marathon halfway.
(Contributed by Team Prithvi, Hum Fauji Initiatives)
👉 Connect with Hum Fauji Initiatives to review, strengthen, and stay disciplined with
your wealth creation journey.
