Believing that you’re always able to do the right thing at the right time is thus a fallacy. “You need a plan, a strategy, to avoid becoming a plaything for these psychological factors, and a victim of your emotions,” says Hens. An investment strategy is successful over the long term when it suits your personality: “A lot of strategies work, but you have to ask yourself, ‘What suits me – and how do I measure success?’” Typically, after ten years, women earn a lower return than men. But is a high rate of return always the objective? Some investors are after higher returns, and are willing to accept significant market fluctuations, while others are satisfied with lower returns in exchange for being able to sleep at night knowing the fluctuations won’t be as great.
Investing isn’t purely a mathematical task. “Investing is a test of character,” says Hens. Investors discover a lot about themselves. They learn to emerge from crises stronger, and learn how to keep their nerve. But you also get to experience the sweet poison of success, which entices you to become too optimistic, overconfident. “From a psychological standpoint, that’s the crux,” says Hens. “When everyone’s celebrating, you have to be careful, and when everyone’s wailing, you have to be bold.” Over the long term, you’re better off to swim against the flow. But you’ve got to have the personality to do so.