Asset Allocation & Risk

How does status quo bias affect investing?

Status quo bias is the tendency, driven by loss aversion and the endowment effect working together, to be reluctant to change the current state of affairs and to stick with existing choices.

In investing, it can show up as leaving a portfolio unchecked and unadjusted even though circumstances have changed. Setting a rule to compare your portfolio regularly with your target asset allocation helps reduce this bias.

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This answer is general financial information as of 2026.10.14, not investment advice. Rules and tax rates change, so please also check the latest guidance from the source institution.