Which human bias are you guilty of? A collaboration with Exo Investing

I love the psychology involved with finance and investing and wanted to explore some of the human bias I have experienced when it comes to investing.


Every so often I chat to my friends, my non-finance world friends about investing. These are educated women with great careers who have earned good money throughout their life. I ask what they have done with their money, mostly they have put it into cash ISA’s. When I ask about investment, stocks and shares ISA’s or general investment funds they shake their heads. They fear the term investment and do not feel comfortable or understand it enough to put their money there. Here we have the first bias – fear.

Fear stops us taking a risk, fear of losing our money takes over the potential upside of gaining money. Fear stops us from understanding how a product works or trying new things. And fear stops us from trying something that could potentially provide great returns.


I have in the past invested in shares of companies that I have worked for. I was totally driven by familiarity, I thought I knew that they were stable and a good investment. Tesco was a company where this strategy went wrong. I worked for Tesco for five years and we were strongly encouraged to invest in share save schemes. One would often hear stories of colleagues cashing in their share schemes after five years and doubling, tripling their money.

The positivity flowed, and no one ever thought that the shares would go down in value. After leaving Tesco I was able to cash in all my share schemes and realise the balance, I did make a nice tidy profit of a few thousand pounds. I missed having the shares, I was comfortable with Tesco as a brand as my money had been with them for so many years.

Without thinking about diversifying, I bought some more Tesco shares, keen to continue enjoying the expected gains, little did I know about the accounting scandal. My investment pretty much halved over a few days. I couldn’t believe that this trustworthy familiar investment was losing money, but I didn’t sell. I was sure the money would come back. Which leads me to loss aversion, the next bias.

Loss Aversion

As humans, we tend to place more value on an amount lost rather than an amount gained. It would be seen far worse to lose £100 than gain £100. I had lost £1000 with my purchase of Tesco shares, they had dropped in value from £4 to £2 very soon after buying them. That £1000 loss felt huge and has felt huge for the nine years that I continued to hold onto these shares. It was the loss aversion. I was so disturbed by the loss that I thought eventually the shares would get back their value.

I talked to one investment expert who shared this loss aversion bias with me and we talked about accepting the loss and moving on. I.e. selling the shares and investing the money elsewhere, where the return might be greater. I moved on, I sold the shares nearly 9 years after buying them, taking a hit of £600. The most terrible investment decision I ever made due to familiarity and loss aversion!

Bandwagon thinking

The dotcom bubble (or the present bitcoin bubble) are classic examples of much chatter about an investment. Positive stories flooding the internet and the media about money to be made. I have had many conversations with colleagues, people in the finance world who have invested recently in bitcoin. I am tempted. So, tempted to be led by the pack mentality and following what it appears many others have done.

But I haven’t invested, maybe the Tesco mistake is still burning away as too much of a warning about following a familiarity or pack mentality – along with the risk of not being diversified!

There is a way of investing where the risks are minimised

I currently have money being squirrelled away each month with Wealthify in their Stocks and Shares ISA. I answered lots of questions to assess my suitability and risk rating, I was given a risk rating and it was recommended my money went into one of five funds. So, my money was being added together with everyone else with the same risk profile as me, our funds were pooled. And the fund is re-balanced regularly ensuring the funds are in the optimal place for market fluctuations.

There is a new investment firm on the market taking this to the next level

Exo Investing are building something different – or as they call it ‘turning investing on its head’. They are offering the ultimate investment product – a unique portfolio to you, managed daily.

exo investing


Like Wealthify, Exo does the hard work for you. However, the big difference here is that the diverse portfolio Exo creates is made just for you – so it’s completely unique to your goals, needs and preferences – rather than the set buckets to go in. It also checks and monitors your portfolio daily, re-balancing as necessary to keep you on track to meet your goals – which is a big change from others where re-balancing is usually just quarterly.

Exo is able to achieve all of this by using artificial intelligence instead of having a fund manager making the choices – and it’s not new, Exo uses algorithms that have managed billions for institutions and the mega rich for decades. So it’s getting rid of all those subconscious biases I mentioned earlier.

This approach could be ideal for those investing for the long term.

Setting up an account with Exo

I have been through the process to set up an Exo account. There are a number of questions to answer that all help create an investment product that is unique to me, my risk levels, goals and choices.

Firstly, I share which financial products I have held in the past, shares, bonds, gilts, unit trusts etc. Your net worth is indicated, excluding property value and amount that can be invested each month, also where that money has come from, savings, inheritance, investments, pension etc.

Exo Investing


You then indicate how many months of money you have set aside to cover your expenses, excluding any Exo money, and make a declaration that you are not using unsecured borrowing to invest. You will not be able to proceed if you do have the suitable requirements here! Exo believe it is more beneficial for your financial situation and safety to save up until you can commit enough resources to your portfolio.

Exo Investing


What is your investment horizon?

The longer your outlook, the higher risk profile can be taken, with Exo then managing that risk to smooth the journey to your goals.

You are then asked if you want to preserve your capital, look for moderate gains or higher gains. Would you be happy with a moderate loss and gain, or a higher gain but higher loss? And what level of loss could you cope with based on real market scenarios from 2008 – would losing 50% be too much, which is what happened to Global Stocks?

Exo Investing

After these questions you are then presented with your risk level. The basis for what type of funds should be invested in. You can then go onto to select your investment focus. This part of the process really interested me as it gives you an element of control over what goes into you fund. You can cherry pick types of industry, geography and style. I am interested in technology from the global markets and investments that are socially responsible. I can select these if I chose or I can leave any selection up to Exo. It’s entirely up to me, I love this choice.

Exo Investing

An Indication of your investments value over time

The next screen gives me an indication of what my investment would be worth given an investment level and monthly contribution based on my risk levels and portfolio choices. This is a clear, pictorial view of a pessimistic, average and optimistic view. I love it!

Exo Investing


Why not give it a try yourself and see what your risk level is and what your investment value could be worth. If you want more control over the choice of what is in your investment, without taking all the risk and decisions yourself, then this could be the right product for you.

As a client, you can keep track of how your portfolio is evolving over time – which I think is great to see just how Exo is working its magic.

Exo is currently running a launch offer of a reduced minimum investment of £5,000, so visit their website to find out more

They also write some great content on their blog, check it out – www.exoinvesting.com/blog/

Fees for Exo are an all-inclusive annual fee of 0.75% up to £100k invested and 0.5% over £100k.

The views and opinions expressed within this article are those of Mrs Mummypenny and not of Exo Investing. When investing, your capital is at risk. The value of your investments can go down as well as up, so you could get back less than you invested. This post was written in collaboration with Exo Investing.


More to explore

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Lynn Beattie

Aka Mrs MummyPenny

Personal Finance Expert

I write about personal finance made simple, lifestyle choices that will save you time and money, as well as products and services that offer great value.

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