How to invest without remorse

REGRET is one of the most powerful emotions an investor can face. Whether it stems from taking a bold position too early or missing an opportunity entirely, feeling rueful often follows decisions made due to uncertainty.

Our survey of more than 4,400 affluent and high-net-worth investors across Asia, Africa and the Middle East, conducted in partnership with business school Insead, reveals that investors tend to regret taking action more than not doing so.

According to our findings, 40 per cent of investors who took action felt regret, compared to 35 per cent who stayed on the sidelines. This is more pronounced in Singapore, where 49 per cent of investors felt rueful for taking action versus 38 per cent who did not.

Reasons for regret

Why does taking action trigger regret more than missing an opportunity entirely? Many investors find themselves disappointed for emotional and practical reasons. Insights into these trends reveal that one of the biggest regrets is not having done enough research.

A recent study conducted by investment firm Columbia Threadneedle found that almost a quarter of investors who’ve made a financial mistake admit that failing to do their research is their biggest financial regret.

In addition, periods of heightened volatility since the start of the year – caused mainly by rising geopolitical tensions – have put investors on edge and could in turn lead to hasty decisions. This could result in selling too soon and missing out on gains, or even incurring losses.

The CBOE Volatility Index (VIX), colloquially known as “Wall Street’s fear gauge”, surged 118 per cent over a three-day period in April, revealing increased investor anxiety as markets experienced large swings, and a variety of asset classes fluctuated wildly.

Furthermore, high fees, poor timing, or being locked into illiquid investments can also contribute to frustration and second guessing.

In Singapore, where investors take a more conservative and cautious approach to their wealth decisions, the feeling of regret is amplified, especially if their actions result in their investments underperforming.

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This risk-averse mindset is also seen in our research, where 32 per cent of investors in Singapore are willing to take a risk if there is an equal chance of gaining or losing the same amount of money. This is lower than the average of 34 per cent across markets in Asia, Africa and the Middle East.

Regret can be valuable

While uncomfortable, regret can be valuable. It is one of many behavioural biases exhibited during an investment journey, and can come with important lessons. Staying calm and not succumbing to emotions following market swings are critical.

Having specific goals and a long-term mindset, rather than trying to time the market, deliver more consistent returns, while diversification helps spread risk and limit the impact of any single setback.

Equally important is balancing risk and return, ensuring investments align with your goals and your risk tolerance. Meanwhile, in an increasingly unpredictable world, having protection in place whether through insurance, liquidity buffers, or robust wealth structures, can cushion the impact of unforeseen events. These principles can help reduce financial risk and soften the emotional blow when things don’t go according to plan.

Professional advice also plays a critical role. Our survey found that investors deciding against financial advice were more likely to lose on their investments. Of those that made losses, the number of investors that relied mostly on their own judgment was three times higher than those who sought professional guidance.

Recognising behavioural biases, such as regret, is a good start to any investing journey. Sharper thinking, improved resilience and better investment decisions can help manage and protect your wealth.

The writer is global head, advisory and managed investments, wealth solutions, Standard Chartered. This column is based on wealth research with Insead.