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The danger of staying close to home when investing

By Sam Instone - June 06, 2018

There are many behavioural biases to overcome when investing.

One of the most common that investors are prone to?

Home bias.

Although inoffensive sounding, home bias is a common investment mistake.

It’s investing too much of your portfolio in stocks and bonds in your own country, and not enough in assets elsewhere.

The result?

Investors are too concentrated in the movements of their domestic market and economy.

This increases their risk, minimises their returns and causes them to miss opportunities to invest in faster-growing markets.

Watch our short video and find out the common (yet false) justification for investing close to home…

Consider this.

The UK stock market is around 8% of the global stock market.

The average holding by a UK investor of UK assets, is around 50%.

That’s home bias.

Following your own hunches or the predictions of others will not deliver results over the long term.  

Being aware of home bias and diversifying globally, will.

Save and invest for a better life