If we’re honest, most of us make financial mistakes at some point. Yet when it comes to money particularly investing people are often far more willing to talk about their successes than their failures.
How often have you heard someone confidently explain how good they are at investing? Rarely do they mention the losses, the near misses, or the decisions that quietly didn’t work out.
I’ve sat in meetings where a colleague proudly told a fund manager how much money they’d made investing in their fund. The problem with that mindset is subtle but dangerous: success can make us feel invincible at least in our own minds.
When Confidence Turns Into Overconfidence
This isn’t limited to investing.
How many people sell a successful business, only to struggle or fail with the next one? Success, however we measure it, is often a combination of skill and luck. But we tend to credit ourselves entirely when things go well and blame circumstances when they don’t.
Investing is no different.
I’ve often shared examples of shares I bought companies like John Deere, Amazon, and others, where I made good profits. But at the same time, I’ve bought shares where I lost a significant amount of money. Over the many years I managed my own pension as a DIY investor, returns were broadly flat.
That experience is far more common than people like to admit.
The Stories We Tell Ourselves About Investing
One of the biggest challenges with money is that we anchor to ideas and narratives.
At the moment, many people believe that passive investing is the only sensible way to invest. Much of this belief is built on what has happened over the last 10–15 years. Advocates of passive investing often point to studies such as SPIVA, produced by S&P Dow Jones Indices, as evidence.
What’s often forgotten is context.
SPIVA is developed by an index provider whose commercial purpose is to promote index-based investing. That doesn’t make the data wrong but it does mean it shouldn’t be accepted uncritically or applied without thought.
Markets change. Regimes shift. What worked brilliantly in one period may not work in the next. Anchoring our decisions to recent history can leave us blinkered.
Why Intelligence Isn’t the Problem
Over the years, a few simple lessons have become increasingly clear to me:
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People who believe they are “smart investors” will eventually be humbled
Markets have a habit of exposing overconfidence. -
We are all vulnerable to behavioural biases
Confirmation bias, overconfidence, recency bias, and loss aversion affect everyone—regardless of intelligence. -
Left unchecked, our own thinking can become our biggest risk
The danger point is when we believe we already know the answer.
This is why investing is rarely just a technical exercise. It’s a psychological one.
The Value of Challenge and Perspective
This is where having someone between us and our decisions can make a meaningful difference.
I’m an advocate of good financial advisers acting as that guide, not to make decisions for us, but to:
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Slow us down
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Challenge assumptions
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Provide perspective when emotions run high
That said, it doesn’t have to be a formal adviser relationship. For some people, sitting with someone they trust someone who is willing to challenge their thinking is enough.
The real risk arises when there is no challenge at all.
When we stop listening, stop questioning, and stop reflecting, mistakes become far more likely—not because we aren’t intelligent, but because we’re human.
A Better Way to Think About Money Decisions
Rather than asking, “Am I right?”, a better question is:
“What might I be missing?”
Good money decisions don’t come from certainty. They come from humility, structure, and an awareness of our own limitations.
And often, the smartest people make the biggest mistakes not because they lack knowledge, but because they stop questioning themselves.
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