Whether or not we like to admit it, practically all of our investment decisions are influenced by emotion. Sometimes that's not a bad thing, but oftentimes our emotions fly in the face of reasoned thinking and logic, costing us valuable opportunities to do a lot better with our money. Consider, for example, that eight out of ten SSIA savers sought refuge in cash deposit accounts because the stock market had fallen dramatically in the period prior to the commencement of the scheme: this was an emotional response by many who would otherwise have chosen equities.

The fall in equities actually represented a golden opportunity for bottombuying shares at cheap prices, a situation that was to last well into 2003, but only two in ten people read it so. This canny 20% are likely to growtheir money much more by maturity than cash deposit savers, furthermore they will also benefit over the long term because they've learned to resist emotional thinking when it comes to investment decisions. Faced with the inscrutability of the finance industry, you may have gathered a set of beliefs that draws on your own experiences, on conversations with peers and with your parents who are, of course, never short of advice or correction!

These beliefs can be hard to ditch and can inform many decisions simply because they reinforce familiar, existing beliefs, which makes them the easiest route to choose in emotional terms. But if we're honest, lots of the methods we employ to solve problems don't stand up to scrutiny. That's why we need to look at the popular myths and ask ourselves how true, or false, they are. I'll put my own credentials on the table now! In my own life, and despite knowing I should avoid the temptation to bypass first principles, like taking the time to do the research, I've bought into complete lemons and lost a bundle and even, on one memorable occasion, the lot.

So don't beat up on yourself too hard if you've followed some of these myths in the past and gotten burned: see them as learning experiences that's the excuse I used! Don't let it put you off investing your time, energy and money in small businesses - that's different, but expect failures en route to successes because that is simply the nature of higher risk investments.

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