Why strategy pays off over emotion

Following a pre-determined investment strategy can help investors avoid costly mistakes like buying high and selling low when markets are in crisis, the report said.

“We are suggesting to people not to trade so much because it is not in their interest. You should only change strategy in periods of quiet reflection.

“Investment strategy is allowed to evolve over time but you have to do it in a thoughtful way,” Greg Davies, head of behavioural finance at Barclays Wealth, said.

That discipline pays dividends, Mr Davies said, pointing out that those who stuck to a structured investment strategy are on average 12 per cent richer than those who do not.

Mr Davies and his team of behavioural finance specialists track and analyse investor reaction to market dynamics and study how their emotions impact investment decisions.

Their study – Risk and Rules: The Role of Control in Financial Decision Making – has highlighted that many of the world’s rich wish they had greater willpower to maintain their investment strategies.