The Anchoring Trap: Why Your XEQT Purchase Price Doesn't Matter

I need to confess something embarrassing.

In early 2023, I bought a chunk of XEQT at around $25.50 per unit. It was the largest single purchase I had ever made, and I felt great about it. I had done my research. I believed in global diversification. I was ready to be a disciplined, long-term investor.

Then the market pulled back, and XEQT dipped to about $23.80.

Logic said: this is a gift. The same globally diversified portfolio you believed in last month is now available at a discount. Buy more. But I could not do it. My brain had latched onto $25.50 as “the price” of XEQT. Buying at $23.80 would mean my first purchase was a mistake. It would mean I had overpaid. And instead of seeing a lower price as an opportunity, I saw it as evidence that I should wait even longer — maybe it would drop to $22, or $21, and then I could really get a deal.

So I waited. And waited. XEQT climbed back to $25. Then $26. Then $27. By the time it hit $28, I had been sitting on the sidelines for months, watching the recovery happen without me, all because my brain refused to let go of a number that never mattered in the first place.

That number was my anchor. And that anchor cost me thousands of dollars in missed returns.

If any of this sounds familiar, you have experienced anchoring bias — one of the most common and most costly cognitive traps in investing. It affects virtually every investor who has ever looked at their cost basis and made a decision based on it. In this post, I am going to explain what it is, show you how it shows up in XEQT investing, prove why your purchase price is irrelevant to future returns, and give you practical strategies to break free.

1. What Is Anchoring Bias?

Anchoring bias is a cognitive bias first described by psychologists Daniel Kahneman and Amos Tversky in the 1970s. The core idea is simple: when making decisions, your brain latches onto the first piece of information it encounters (the “anchor”) and uses it as a reference point for everything that follows — even when that anchor is completely irrelevant.

The classic experiment goes like this: Kahneman and Tversky spun a wheel numbered 1 to 100 in front of participants. The wheel was rigged to land on either 10 or 65. Then they asked participants an unrelated question: “What percentage of African nations are members of the United Nations?”

The people who saw the wheel land on 10 guessed about 25%. The people who saw it land on 65 guessed about 45%. A completely random number on a wheel had shifted their estimates by 20 percentage points — on a question that had absolutely nothing to do with the wheel.

That is anchoring. Your brain grabs a number, and it distorts every judgment that follows.

Everyday Anchoring Examples

Anchoring is everywhere once you start looking for it:

• House prices: A seller lists a home at $750,000. Even if the house is only worth $620,000, buyers start negotiating from $750,000 as the reference point. The listing price becomes the anchor, and it pulls every offer upward.

• Salary negotiation: The first number mentioned in a negotiation tends to dominate the outcome. If a recruiter asks “Would $70,000 work?” your brain anchors to $70,000 — even if you would have asked for $85,000 otherwise.

• Retail sales: A jacket is “marked down” from $300 to $179. You feel like you are getting a deal because your brain anchored to the $300 “original” price. But what if the jacket was never worth $300? The anchor did its job anyway.

In every case, the pattern is the same: an initial number — often arbitrary — becomes a reference point that distorts your judgment about value, fairness, and what you “should” pay. And in investing, the most dangerous anchor of all is the price you paid for a stock or ETF.

2. How Anchoring Bias Shows Up in XEQT Investing

You might think anchoring bias is mostly a problem for stock pickers — people trying to time entries and exits on volatile individual names. But it absolutely affects XEQT investors too, in ways that are more subtle and arguably more costly because XEQT is supposed to be a “set it and forget it” investment.

Here are the most common ways anchoring bias messes with XEQT investors:

a) “I’ll Buy More When It Gets Back to $24”

This is the classic anchor trap. You bought XEQT at $24, the price went up to $28, and now you feel like $28 is “too expensive.” You tell yourself you will buy more when it dips back to $24. But $24 has no special significance — it was just the price on the particular day you happened to make your first purchase. The market doesn’t remember your buy price. It doesn’t owe you a return trip to $24. And while you sit on the sidelines waiting for a dip that may never come, the market keeps compounding without you.

b) Refusing to Invest Because “XEQT Was Cheaper Last Year”

This is anchoring to a historical price you did not even buy at. You remember that XEQT was $22 back in late 2022 and it is $30 now, so you feel like you “missed your chance.” But the XEQT of today is not the same as the XEQT of 2022. The underlying companies have grown their earnings, expanded into new markets, and increased their dividends. A higher price often reflects a fundamentally more valuable portfolio, not an “overpriced” one.

Saying “XEQT was cheaper last year” is like saying “my salary was lower five years ago” and refusing to accept a raise because the old number feels more “right.”

c) Obsessing Over Your Cost Basis Instead of Total Return

I see this constantly in online investing communities. Someone posts: “My cost basis on XEQT is $26.80 and it’s currently at $26.50. Should I sell?” They are fixated on whether they are “up” or “down” relative to their purchase price, as if that number determines whether XEQT is a good investment.

Your cost basis tells you one thing: what you paid. It tells you absolutely nothing about:

• Where XEQT is going next
• Whether it is currently overvalued or undervalued
• Whether you should buy, sell, or hold
• Your long-term expected returns

Yet investors treat their cost basis like a verdict on their decision-making ability. If they are above it, they are “winning” and the strategy is validated. If they are below it, they are “losing” and start questioning everything. Neither reaction is rational.

d) Comparing Today’s Price to Your First Purchase

“I bought my first XEQT at $21, and now it’s $30. That feels too high.” But nine years from now, when XEQT might be at $45, you will look back and wish you had bought at $30. The price always feels high relative to your anchor. That is the whole point of anchoring — it makes the current price feel wrong by comparison, regardless of whether it actually is.

Here is a table that illustrates this beautifully:

Every price feels expensive if your anchor is lower. And since the global economy grows over time, your anchor will almost always be lower than the current price. If you let anchoring control your decisions, you will always find a reason not to invest.

3. Why Your XEQT Purchase Price Is Literally Irrelevant

I want to be blunt about this, because it is the single most important concept in this entire post: the price you paid for XEQT has zero impact on its future performance. None. Not a little. Literally zero.

Here is why.

The Market Doesn’t Know What You Paid

This might sound obvious, but really sit with it. There are billions of dollars in global equity markets being priced by millions of participants — institutional investors, pension funds, hedge funds, central banks, and individual investors across the world. None of them know or care that you bought XEQT at $25.50. Your purchase price exists in exactly one place: your brokerage account. The market is wholly indifferent to it.

XEQT’s future returns are determined by the earnings growth, dividend yields, and valuation changes of the 9,000+ companies it holds. Those factors do not change based on what you or anyone else paid for a unit of the ETF.

The Data: Buying at “Bad” Times Still Works Out

One of the strongest arguments against anchoring bias is to look at what happens to investors who buy at the worst possible times. Let us say you had spectacularly bad luck and bought XEQT (or its underlying index) at every major market peak:

The pattern is consistent across all of investing history, not just XEQT. People who bought the S&P 500 the day before the 2008 financial crisis, the worst timing imaginable, were solidly in the green within about five years. People who bought at the peak of the dot-com bubble in 2000 were positive within about six to seven years.

The entry price matters far less than time in the market. Whether you bought at $22 or $28, XEQT’s long-term expected return is driven by global economic growth — and that growth compounds over years and decades regardless of your starting point.

What Actually Determines Your Returns

If your purchase price does not matter, what does? Here is what drives your long-term XEQT returns:

1. How much you invest — Total dollars deployed over time matters far more than the price on any given day.
2. How long you stay invested — Time in the market is the most powerful variable in your portfolio. A decade of compounding dwarfs the impact of buying at $24 vs. $28.
3. Whether you keep investing consistently — Regular contributions through dollar-cost averaging smooth out any entry point concerns and ensure you benefit from both dips and recoveries.
4. Global economic growth — The 9,000+ companies inside XEQT are generating revenue, building products, expanding into new markets, and increasing shareholder value every single day. That is what drives long-term returns.
5. Fees and taxes — XEQT’s 0.20% MER is extremely low, which means more of your returns stay in your pocket. Holding XEQT in a TFSA or RRSP further reduces the drag.

Notice that “the price I bought at” does not appear on that list. Because it is not a factor.

4. The Connection Between Anchoring and Sunk Cost Thinking

If you have read my post on the sunk cost fallacy, you will notice these two biases are cousins. Anchoring makes you fixate on your purchase price. Sunk cost thinking makes you refuse to act because of what you have already “invested.”

Together, they create a paralyzing loop: “I bought at $27. It’s at $24 now. I can’t buy more because that would raise my cost basis. But I also can’t sell because I’d be locking in a loss. So I’ll just… do nothing.” And doing nothing — when your investment plan calls for regular contributions — is one of the most expensive decisions you can make.

Both biases feel like caution and prudence. They are not. They are cognitive traps masquerading as wisdom, and they keep you on the sidelines while the market moves on without you.

5. Seven Practical Strategies to Beat Anchoring Bias

Understanding anchoring is the first step. But knowing about a bias does not automatically make you immune to it. You need specific, practical strategies to counteract its pull. Here are seven that work:

1. Stop Looking at Your Cost Basis

This might sound extreme, but it is the single most effective thing you can do. Most brokerage apps prominently display your average cost and your unrealized gain or loss. Some even colour it green or red, adding an emotional punch to a meaningless number.

If your platform allows it, hide the cost basis column. If it does not, train yourself to ignore it. The number that matters is your total portfolio value — not where each individual position sits relative to its purchase price.

2. Use Dollar-Cost Averaging to Remove Price Fixation

When you invest a fixed amount on a regular schedule, you naturally buy at many different prices — sometimes high, sometimes low, usually somewhere in the middle. Over time, this creates a blended cost basis that is almost impossible to obsess over because there is no single “anchor” to fixate on.

Dollar-cost averaging is not just a mathematical strategy. It is a psychological one. It takes the single scariest moment in investing — “Am I buying at the right price?” — and spreads it across dozens or hundreds of purchases until the question loses its emotional charge entirely.

If you invest $500 into XEQT every two weeks on payday, here is what happens to your anchoring anxiety:

By a few months in, you have stopped caring about any single price. Your cost basis is a blend of many prices, and the emotional weight of any individual purchase has faded. That is the anti-anchoring effect of DCA in action.

3. Focus on Shares Owned, Not Price Paid

This is a mental reframe that I found incredibly powerful. Instead of thinking “I bought XEQT at $27 and now it’s $25 — I’m down,” think “I own 450 units of XEQT. Next month I’ll own 468. The month after, 486.”

Your wealth is not determined by your cost basis. It is determined by the number of shares you own multiplied by their current value. Every time you buy more XEQT — regardless of the price — you are adding shares. And over time, those shares will grow in value as the global economy grows.

Tracking your share count going up is motivating. Tracking your cost basis relative to the current price is anxiety-inducing. Choose the metric that serves your long-term goals.

4. Remove Price Alerts

If you have set price alerts for XEQT (“alert me when XEQT drops below $25”), you are literally building anchoring into your investment process. You have picked an arbitrary price and told your phone to reinforce it. Delete the alerts. For a long-term XEQT investor, price alerts serve no purpose except to create artificial anchors and encourage emotional trading.

5. Write an Investment Policy Statement

An investment policy statement (IPS) is a one-page document you write for yourself that spells out what you invest in, how much per period, when, and why. Most importantly, it defines when you will deviate: only if your risk tolerance fundamentally changes, never because of short-term price movements.

When anchoring bias whispers “XEQT is too expensive right now, wait for a dip,” you pull out your IPS and it says: “I invest $500 every payday regardless of price.” Decision made. Bias defeated. Move on.

6. Zoom Out on Your Charts

If you look at a one-week chart of XEQT, every price move looks dramatic. Instead, look at a five-year or ten-year chart. On that timescale, the dip you were agonizing over last month is invisible. The “high” price you were afraid to buy at is a tiny blip on an upward line. Zooming out does not change the data — it changes your perspective. And perspective is the antidote to anchoring.

7. Ask Yourself the “Clean Slate” Question

This is the most powerful debiasing question I know: “If I had no position and cash instead, would I buy XEQT at today’s price?”

If the answer is yes — and for a long-term investor, it almost always should be — then your existing cost basis is irrelevant. You would buy at today’s price with fresh cash, so there is no rational reason to refuse to buy more, hold, or continue your plan just because your old cost basis is different.

This question forces you to evaluate XEQT on its merits today, not through the distorted lens of what you paid yesterday.

6. The One Number That Actually Matters

If your purchase price is irrelevant, and your cost basis is a distraction, what should you actually pay attention to?

Your total portfolio value over time.

That is it. The single number that matters is: “How much is my portfolio worth today, and is it growing?” Not “Am I up or down relative to this one purchase I made in March 2023.” Not “Is XEQT above or below my average cost.” Just: total value, tracked over months and years.

Here is what a healthy XEQT portfolio trajectory looks like for someone investing $500 per month:

At year 30, whether your first XEQT purchase was at $24 or $28 makes a difference of maybe $200 in a portfolio worth three-quarters of a million dollars. The anchoring that felt so important in year one is completely, utterly, laughably insignificant in the long run.

This is what I want you to internalize: anchoring bias makes you obsess over a detail that is financially irrelevant on the timescale that actually matters for building wealth.

The number that matters is the bottom row of that table. The total. The result of decades of consistent investing. Not the price on the day you started.

7. Breaking Free: My Anchoring Recovery Story

I want to come back to where I started — my own anchoring mistake — because the ending matters.

After watching XEQT recover from $23.80 past my $25.50 anchor and all the way to $28 without me, I felt frustrated and foolish. But that frustration was the catalyst for change. I wrote myself a one-page investment policy statement with one critical line: “I invest on the 1st and the 15th of every month regardless of price.”

I set up automatic transfers on Wealthsimple. The money moves on schedule. I buy XEQT at whatever the price happens to be. Most months I have no idea what the price is because I have stopped checking between purchases.

And my portfolio grew. Not because I timed anything perfectly — I obviously did not — but because I showed up consistently. Looking back at my spreadsheet, the purchases I agonized over the most — the ones where I almost did not buy because the price felt “too high” — turned out to be some of my best. Time in the market beats timing the market, and every day I spent on the sidelines waiting for my anchor price was a day my money was not compounding.

Key Takeaways

1. Anchoring bias makes you fixate on your purchase price and use it as a reference point for all future decisions — even though the market does not know or care what you paid.

2. Your XEQT cost basis is irrelevant to future returns. What drives your long-term wealth is how much you invest, how long you stay invested, and the growth of the global economy — not the price on the day you first clicked “buy.”

3. Anchoring makes every price feel wrong. If your anchor is below the current price, it feels “too expensive.” If your anchor is above, you feel like a loser. Neither feeling is based on reality.

4. Dollar-cost averaging is the best antidote. When you invest regularly at many different prices, no single price becomes an anchor. The fixation dissolves naturally.

5. The only number that matters is your total portfolio value over time. Track that, not your cost basis. In 20 years, you will not remember or care what you paid for your first unit of XEQT.

6. Write an investment policy statement and follow it. When anchoring bias whispers “wait for a better price,” your IPS answers “the plan says invest today.”

7. Anchoring and sunk cost thinking work together to keep you paralyzed. Recognizing both biases — and having a systematic plan that overrides them — is how you build wealth instead of building regret.

The price you paid is in the past. Your future returns start from today’s price, always. Stop looking backward and let your money compound forward.

Related posts:

• Dollar-Cost Averaging with XEQT
• The Sunk Cost Trap: Why You’re Holding Losing Stocks Instead of Buying XEQT
• When Is a Good Time to Buy XEQT?
• Confirmation Bias: How Your Brain Sabotages Your Portfolio
• Recency Bias: Why Last Year’s Returns Are the Worst Reason to Change Your Strategy