Step back for a moment and ask yourself an honest question:
Have you ever made a financial decision and then regretted it?
I’m more than happy to put my hand up to that.
Regret doesn’t have to be life-changing to be instructive. Mine was a Samsung smartwatch. I liked the look of it, convinced myself it would be an upgrade, and ignored the quiet voice reminding me that my trusty Garmin already did exactly what I needed. It looked great. The tracking was awful. I replaced it fairly quickly.
A small decision, but a familiar feeling.
Now apply that same pattern to investing or financial planning and the consequences can be far bigger.
When Confidence Turns Into Cost
In financial decisions, regret often starts with confidence.
Common thoughts include:
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“I don’t need an adviser — why pay someone when I can pick the investments and products myself?”
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“I’ll save money by doing it on my own.”
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“I’m intelligent enough to understand what’s going on.”
None of these statements are unreasonable. In fact, they often feel logical especially when markets are rising and decisions appear to be working.
The problem is that confidence is often strongest just before conditions change.
Markets fall. A “great” investment tumbles. Life throws something unexpected into the mix. And suddenly, decisions that once felt clear now feel rushed, emotional, and hard to reverse.
What Behavioural Science Tells Us
This pattern isn’t about intelligence, it’s about being human.
Behavioural finance research consistently shows that:
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People feel the pain of losses roughly twice as strongly as the pleasure of gains (loss aversion).
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Decisions made under emotional pressure are more likely to be regretted later.
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Overconfidence increases risk-taking, particularly after periods of success.
Much of this work was popularised by Daniel Kahneman, whose research showed that even highly intelligent people rely on mental shortcuts when making decisions, especially under uncertainty.
In short, emotion often overrides logic, particularly when money is involved.
Why Regret Happens After the Fact
Regret usually isn’t caused by the outcome alone. It comes from the realisation that:
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We didn’t slow down
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We didn’t fully think it through
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We didn’t ask the right questions at the right time
When we want something — a product, an investment, or a sense of control — our emotions take the driving seat and logic quietly moves to the back.
That’s when mistakes creep in.
A Simple 5-Step Framework for Better Decisions
To help reduce regret, here’s a simple five-step decision framework you can use before making any significant financial choice.
1. Stop
Create distance between the impulse and the action. Most poor decisions are made quickly.
2. Ask Why
Why do you want this?
What problem is it really solving?
What difference will it make to your life?
3. Check Fit
How does this decision fit with:
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Your wider financial plan?
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Your goals?
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Your time horizon?
If it doesn’t clearly fit, that’s a warning sign.
4. Weigh the Cost
This isn’t just about money.
Consider:
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Financial cost
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Opportunity cost
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Emotional cost if it goes wrong
Ask yourself: Is this worth it even if things don’t work out as hoped?
5. Wait (and Then Decide)
Time is one of the most effective decision-making tools available.
If, after waiting, you still feel confident act.
If you’re unsure, speak to someone you trust.
Often, the role of a good adviser isn’t to give you an answer, but to slow you down enough to make a better one.
The Real Aim: Fewer Decisions You Regret
Good financial decisions aren’t about being right all the time. They’re about:
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Reducing avoidable mistakes
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Making decisions you can live with
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Accepting uncertainty without reacting emotionally
Regret usually comes not from what we decided, but how we decided.
Slow the process down, introduce challenge, and give logic time to catch up with emotion and you dramatically improve your chances of making decisions you won’t look back on wishing you’d handled differently.
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