GLOSSARY TERM
Home Bias
Home bias means investing too much of your money in your own country compared with the global market.
What does this mean in practice?
This often happens because familiar companies and local markets feel safer or easier to understand. But if too much of your portfolio is tied to one country, your diversification becomes weaker and your results depend more on the fortunes of that one market.
Example
An investor from a small country puts nearly all investments into local stocks instead of using a broad global fund. Even if those companies feel familiar, the portfolio is much less diversified than it appears.
Why it matters
Home bias can increase concentration risk without many people noticing it. A broader global approach often creates better diversification and reduces dependence on one country’s economy or stock market.
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