Behavioural Finance
Familiarity Bias
Definition
What is Familiarity Bias?
Preferring investments that feel familiar, regardless of diversificationSpreading investments across assets, issuers, sectors, or markets to reduce dependence on one exposure. or value.
Example in practice
How This Looks in Practice
An investorA person or organisation that commits capital with the expectation of a financial return. holds mostly shares from their employer and home country.
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Related Terms
Behavioural Finance
Loss Aversion
The tendency to feel losses more strongly than equivalent gains.
Behavioural FinanceOverconfidence Bias
The tendency to overestimate one's knowledge, forecasting ability, or control.
Behavioural FinanceConfirmation Bias
The tendency to seek or interpret information that supports an existing belief.
Sustainable InvestingESG Investing
Incorporating environmental, social, and governance factors into investment analysis or ownership.