My dear Friends,

I hope you are either already enjoying your holidays or you have something extraordinary coming up soon. However, before I take my annual long break, I want to discuss the “Turkey illusion”.

You heard right! And because my topics are typically around investing, you might now suggest that I truly need a holiday, writing about turkeys! I totally agree about the holidays but not because of the headline.

I am not delusional. In fact, there is such a thing as a “turkey illusion”. Worse, it is a trap investors can fall into. So let us take a closer look just before we are all off to enjoy our well-deserved holidays- without a thought about finances.

So welcome to “Feathers & Finances,” where we embark on a journey to understand the ‘Turkey Illusion’ in investing.

A biased risk assessment

In the world of investing, the landscape is ever-changing. But wait, there is still something which changes far too slowly. For one, too many women still shy away from going on their own investment journey. Second many who invest easily fall prey to the ” Turkey Illusion.”

It is a fact that women’s reluctance often stems from perceived complexity and fear of risks. In order to minimize that risk, many women fall prey to the “Turkey Illusion”! Meaning they tend to make investment decisions based on a financial experience in the past rather than available info.

This leads to overly cautious choices or even an aversion to investing. Ultimately no choice or wrong choices are made, which ultimately endangers women‘s financial security.

Many women have a “money management strategy” based on very personal experiences or events they`ve witnessed in the past. In short, the money is kept in a savings account, or invested in lifeinsurances rather than being investedproperly. Often a once-chosen investment strategy is never adapted to the ever changing global economy.

Women have a deposition to avoid risk, which is good. However, if our risk assessment is based solely on events we have experienced or the ones we prefer to recall while discounting events that we have not experienced or didn’t leave a lasting impression, we need to question our decision-making process.

Alas, there is hope! We can learn to outsmart the turkey trap! Empowerment comes from knowledge and diverse perspectives. Ditch the old norms, seize control, and invest smartly.

Once upon a time

Once upon a time, a turkey named Tom lived on a cosy farm. Every day, the farmer would come at the same time with food, water, and care for Tom, making him feel safe and content. Tom grew accustomed to this routine and developed a strong belief that life was predictable and secure.

As days turned into weeks and weeks into months, Tom had no reason to doubt the farmer’s kindness.

As Thanksgiving approached, Tom’s fate took a sudden and unexpected turn. On the eve of Thanksgiving, the farmer arrived with an axe, and in a shocking twist, Tom’s predictable world came crashing down. He realized too late that his seemingly comfortable life was an illusion, a false sense of security based on limited and biased information.

The ” Turkey Illusion”

The “Turkey Illusion,” a concept derived from behavioural finance, epitomizes the cognitive bias known as availability bias. It refers to the tendency of individuals to rely heavily on recent or readily available information to make judgments about future events.

Investors can be blindsided by using limited data to predict financial outcomes. This illusion underscores the importance of diversification and thorough analysis to avoid being caught off guard. Being aware of the “Turkey Illusion” can lead to wiser, more informed investment decisions.

Just because you never died before, doesn´t make you immortal

Nassim Taleb, Lebanese – America mathematical Statistician; 1960-

Let`s not be turkeys

Honestly, it is time to overcome any financial Illusions we might have indulged in for years.

The ” Turkey Illusion” can mislead us to spend too much time fighting the last battle’(for example, holding on to a stock because it performed well 10 years ago but has lost value since).

At the same time, this can blind us to risks that we haven’t experienced.

It is actually quite simple and only requires a more vigilant approach that empowers us to navigate the intricate web of biases and pitfalls.

A. Identifying Common Pitfalls: Recognizing these hidden traps is the first step towards financial wisdom. From the “Turkey Illusion” to the “Herd Mentality,” we must confront our tendencies to make decisions based on recent events or follow the crowd blindly. Awareness is the key to breaking free from these shackles.

AND

B. Building a Strong Financial Foundation: Just like a sturdy structure needs a solid base, our financial journey demands a strong foundation. Budgeting and investing wisely are crucial components of this groundwork. Aligning our goals with our financial plans helps us stay on track amidst market uncertainties.

Proven Strategy

The best route is to go through a “pre-mortem” thought process, which goes like this:

1. Assume that you failed
2. Identify the likely culprit
3. Assess potential protection strategies
4. Repeat

A post-mortem analysis – it’s like a wild brainstorming session for your finances! You will be diving headfirst into the potential “fatal” risks that could mess up your plans. This strategy forces you to think outside the box. But without the panic we feel once we are in that mess!

This strategy enables you to tackle one risk at a time and rethink your approach if necessary. All in a safe environment.

The best strategy for implementing a pre-mortem is to follow this process with a financial advisor: they have seen risks and pitfalls you may never have heard about, and their expanded perspective can help you put risks into a broader context.

Overcoming financial illusions necessitates a conscious effort to identify and address our biases. I have plenty of friends who either pump all their money into several life insurances as their primary investment or only invest in funds but never in stocks or bonds.

Frankly, only informed and rational decisions steer us towards a prosperous and secure future. So, let’s embark on this journey with clarity, conviction, and determination to conquer the world of investing!

Outsmart the turkey

So now we know why we need to tackle the infamous “Turkey Illusion” in investing! Just like the poor turkey living the good life on a farm, we might get too comfy in a predictable financial routine.

But beware! The illusion tricks us into relying solely on bygone info while totally overlooking potential future risks. We need to let go of such habits and break free from this trap.

Diversify your financial knowledge, embrace new perspectives, and make savvy choices. Knowledge is our shield! Spread your investing wings and soar beyond the “Turkey Illusion”.

The superpower

Honestly, the ultimate superpower to conquer the pesky “Turkey Illusion” is cultivating a positive money mindset! Picture this: your mind is like a magic garden, and your thoughts are the seeds. Nourish it with positivity, and watch those money trees grow tall and strong!

Start with kicking those negative “can’t-do” vibes to the curb. Embrace the mantra “I can handle anything!” You’re in the driving seat-don´t ever forget this!

Next, pull those” it is what it is” and ” I have always done it this way” or “there is nothing I can do anyway” weeds that the “Turkey Illusion” loves to plant. Water your mind with information instead – you’ve got this, and you’ll overcome any bumps on the road!

For example, bear markets are painful, and you will probably experience several during your investing career. However, it is relatively easy to protect against the risk that bear markets will leave lasting damage on your retirement plan.

While many risk assessments focus on disastrous events, the truth is that sometimes risks can be caused by otherwise good events. For example, one potential culprit for the“death” of your retirement success could be living longer than you expected. If you plan for a 30-year retirement but end up living 50 years into retirement, there is a good chance that this could deplete your wealth or require you to cut back on your lifestyle and philanthropic goals.

Nurture patience, too. Rome wasn’t built in a day, and neither is securing your wealth. Embrace every step of the journey – the baby ones and the setbacks.

Lastly, surround yourself with informed people. But never follow trends or succumb to peer group bias. Check your investment pattern at regular intervals and check any information first before you make a move! This kind of flexibility will make your portfolio more resistant.

There is one very important element: You’re the average of the people you hang out with, so choose wisely!

See beyond the illusion, embrace risks, and face the financial world with a relaxed smile. Remember, you’re the master of your money destiny!

Going Beyond

Breaking free from the “Turkey Illusion” is your ticket to financial liberation! Kiss repetitive decisions goodbye and embrace a calm and collected mindset. It’s time to conquer the investing game like a true champ – savvy, bold, and ready to rock your financial future!

A. Taking Control of Your Financial Future: Smash biases and liberate yourself from being a slave to events that happened ages ago. It’s time to embrace the power of big-picture thinking! Plot your long-term financial course with unwavering confidence and make informed decisions that stand the test of time. Embrace a cool and collected mindset, seeing beyond the illusion.

B. Expanding Opportunities: Diversification: Let’s bust the “Turkey Illusion” and bring diversification to the table! Stop putting all your eggs in one basket – that’s so last season! It’s time to party with multiple investments and play with various asset classes. Diversification is like hosting a finance fiesta with various guests. When one leaves early, you’ve still got the party going!

So, unleash your inner financial genius and mix up your money moves! Play with different investments, pick various asset classes, and let your fortune mingle with possibilities! Embrace the art of diversification and secure your wealth for the future.

“Learn from the mistakes of others. You can’t live long enough to make them all yourself.”

Elanor Roosevelt, American First lady, Human Rights Activist; 1884-1964

Feathers meet finances

We’ve learned that the “Turkey Illusion” can cloud our decision-making, leading to suboptimal choices. Breaking free from this illusion empowers us to make smarter, more informed investment decisions. My dear friends, we have known it all along, the key to financial greatness lies in seeing beyond biases and changing strategies if necessary. However, only a few act accordingly!

We need to be proactively in charge of your financial destiny. It is upon us to expand our horizons through knowledge and information.

Changing our money mindset is a good start. Because we gain the confidence to take control of our financial future. Embracing diversification opens up a world of opportunities, reduces risks and maximizes potential returns.

There are some pretty simple rules: Firstly, don`t get stuck in stereotypes, and don’t allow yourself to become complacent. Secondly, aim at stepping out of your comfort zone time and time again. Thirdly, dare to think outside the box. Because I am sure you would not want to end up like Tom, the poor turkey.

Armed with knowledge and a resilient spirit, we’ll embrace the ever-changing financial landscape, ready to conquer the challenges that lie ahead. Remember, the “Turkey Illusion” is no match for our collective brilliance.

Pinwall

Women who are insecure when investing fall prey to the “Turkey Illusion” .

The Turkey Illusion, also called “availability bias”, happens when we decide based on a few selected decisions or past events. This bias also rules us if we do not change a strategy only because the strategy has served us well in the past.

Fully understanding the ‘Turkey Illusion’ in Investing” empowers women to conquer biases and take better control of their financial journey.

We need to conquer those biases, cultivate a positive money mindset and embrace the art of diversification to maximize opportunities and manage risks in the financial world.

Women need to get ready to break free from stereotypes, empower themselves, and rewrite the narrative of women and wealth.

SOURCE: UBS; LINKEDIN; IVOOX; PSYFITECH; ChatGPT;Wikipedia; Simply Pschology; Verywell Mind