Exam 4: How Wellness Influences Financial Choices; the Emotional and Moody Investor

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Myopic loss aversion is when people tend to take less portfolio risk when they check their portfolio more often. This is due to the emotional response that investors feel after each time they check their portfolio. However, even professional traders commit this error.

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Strong emotions, whether happy, sad, or angry, lead to more risk taking.

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Individuals who are more obese or are ill, such as having the flu, tend to take less risk. Additionally, individuals with poor mental health tend to invest in less risky assets and are less likely to have a retirement account.