You should avoid These Common Money Mistakes

Aspire Compass – Edition #12

Avoid These Common Money Mistakes and Stay Ahead of 80% of People!

Hey there!

Welcome to the edition #12 of Aspire Compass—your Friend to making smarter financial decisions.

There are a few basic money mistakes that, if avoided, can help you manage your finances better than most people. Let’s dive into three of the biggest ones:

📌 1. Overconfidence Bias – "I Know Everything" Trap

Many people believe they can predict the stock market, crypto trends, or real estate prices based on hearsay or gut feeling. They assume their investments are always the best and that others don’t understand as well as they do.

This is called overconfidence bias, and it often leads to financial losses. A study by Barber and Odean (2005) showed that day traders earn 45% less profit compared to long-term investors. Interestingly, men tend to lose more because they are generally more overconfident in financial decisions.

🔹 How to avoid this?

• Be cautious about short-term trading.

• Accept that you can’t predict everything.

• Focus on long-term, well-researched investments.

If you avoid overconfidence, you’ll find yourself much happier with your money!

📌 2. Herd Mentality – "Everyone’s Doing It, So Should I"

Ever seen a flock of sheep? They blindly follow one another, and a single dog can control an entire herd. This same herd mentality applies to financial decisions.

People jump into investments just because others are doing it—whether it’s a trending stock, a new crypto coin, or a get-rich-quick app. They don’t ask how the business makes money, where the returns come from, or whether it’s sustainable.

🔹 How to avoid this?

• Always question an investment before jumping in.

• Research how a company generates revenue before trusting its returns.

• Think about long-term value rather than following trends.

If you blindly follow the crowd, you may find yourself in a financial trap sooner or later.

📌 3. Anchoring Bias – "First Impressions Matter Too Much"

Anchoring bias happens when we give too much importance to the first piece of information we receive, even when later facts contradict it.

For example, imagine you read in a magazine that land prices in a particular area will skyrocket due to an upcoming project. You share this with friends, and they admire your "insider knowledge." Later, new reports emerge about crime rates rising in the same area, but because you heard the positive news first, you ignore the negative facts.

🔹 How to avoid this?

• Always seek multiple sources of information.

• Be open to changing your opinion based on new facts.

• Don’t let ego cloud your financial decisions.

Being flexible with your mindset can help you make wiser investment choices.

💡 Final Thoughts:

Avoiding overconfidence, herd mentality, and anchoring bias can significantly improve your financial decisions. Smart money management isn’t just about making the right choices—it’s also about avoiding costly mistakes.

💬 Have you ever made one of these mistakes? Share your experiences and help others learn!

Stay updated with Aspire Compass for more financial insights

Think Smart. Invest Wisely. Stay Ahead.

that’s it

[Arif Hasan]

Aspire Compass

 📌 Important Disclaimer:

This newsletter is for information and educational purposes only, the above are not financial advice. We are not associated with any of the listings from above (unless mentioned otherwise). Do your own due-diligence.