This week I have had three separate conversations where people know what they should be doing, but something inside them is holding them back. This is not uncommon, nor unexpected given we have been taught not to talk about money.

This article outlines the seven main behaviours that stop people from building wealth and living their ideal life.

Loss aversion

Avoiding any actions or investments that could result in a loss. People in this situation often have substantial sums in cash, and are waiting for “the right time” to invest.

It could lead investors to sell something after it has fallen in price and buy more of something that has gone up.

Anchoring bias

This is where you get stuck on a price of an asset from the past and won’t buy or sell until it reaches this point. A good example is when people are hesitant to invest in a rising market because they are waiting for prices to fall back to where they were.

Chasing short-term profits

Often investors need to confirm to themselves they are doing well and are ‘making a profit’. To do this, they often sell investments that are performing well. By selling for more than it cost, they are confirming to themselves they are making money. What in fact is happening, is they are left with all of the underperforming investments. Short-term gain, but long-term pain.

Confirmation bias

There is loads of information about investments and building wealth that is readily available. In the US alone, there are about 600 new books each year published on personal finance. The problem with so much information being available is it is easy to confirm an opinion, regardless of whether it is right or wrong.

Lack of patience

A lot of people overestimate what they can achieve in a few months, but underestimate what they can achieve in a few years. Be patient. Value the power of compounding.

Overestimate their own capability

We have all seen or heard stories of going from rags to riches after a few quick wins on the share market or crypto. This is rarely down to brilliance and expertise, but more often down to plain good luck. If you are trying to beat the average of the share market by picking which ones to buy, remember that in managed funds the ‘experts’ only manage to beat the index 25% of the time.

Analysis paralysis

There is a lot to think about with personal finance. There are quite a few factors to take into account, including what level of volatility you can handle, figuring out what to invest in, prioritising your short and long-term goals, trying to minimise tax, and wanting to maximise returns. In the end, most people end up doing nothing, or at least nothing in a structured way.

Finally, don’t think you are the only one whose behaviours stop you from doing the best you can. In fact, a large part of what I do with people is to give them the confidence, certainty and control so they can move forward and build the life they want.

If you want to discuss how we can help you, book a chat via the button below on contact us on 0417 034 252 or at

About the Author
Phil Harvey is an independent financial adviser. In 2017 Phil set up his company Construct Wealth to help clients best manage their finances so they focus on what is important to them. He is a founding member of the Profession of Independent Financial Advisers and a tax financial adviser, registered with the Tax Practitioners Board.

General Advice Warning
This advice contains general information. It may not be suitable to you because it does not consider your personal circumstances. Phil Harvey and Construct Wealth are authorised representatives of Independent Financial Advisers Australia (AFSL 464629)

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