As you get older, does your financial knowledge decrease?
Good question.
I do not think financial smarts necessarily fall with age. I know a lot of very smart investors of advanced years. However, a new study has come out that finds investing intelligence does decrease over time.
A scary thought. Especially for my 20 something nephew – nephew by marriage I like to point out, definitely not the same gene pool – who seems to already be lagging in this area. (more…)
Behavioural finance (a.k.a. behavioural investing) examines how psychological factors impact an individual’s investment decisions.
One likes to imagine that investors are rational creatures, but that is often far from the case. I find behavioural finance very interesting in how it explains certain, less logical, investing actions.
Today a look at how investors often keep their losing investments longer than they should. (more…)
Investment markets have resembled roller coasters in recent times.
Up, down, sideways, making many investors sick to their stomaches.
While investing is an emotional experience at any time, this turbulent period makes things even worse for lots of investors.
So what should you do? (more…)
I find behavioural finance very interesting as it relates to personal investing.
Behavioural finance looks at human emotion and psychology to try and explain investment decisions and financial trends.
It is an area I will explore more later this year.
For today, a few quick thoughts triggered by an article I read on the weekend. (more…)
Avoiding an investment bubble is not as easy as it may seem. If it were, investors would take appropriate steps and the bubble would never be created in the first place.
So what can you do to avoid losing a lot of money quickly? Let us consider some common sense avoidance tips.
Learning how to invest while young is likely the best investment in time you will ever make. You can attempt a variety of strategies on paper. If they succeed, they may be used with real money once you have some to invest. If they do not, you learn a valuable lesson without losing any money.
Today, let us look at ways to practice identifying investment bubbles. (more…)
Following on from “Three Common Investment Mistakes” and the impact of behavioural finance on investing, let’s take a quick look at investment bubbles.
Most of you are familiar with the US housing crash over recent years. Some of you may also remember the dot.com craze in the 1990s. Those would be examples of bubbles breaking.
In his very interesting work, The Ascent of Money, Niall Ferguson lists 5 stages of an investment bubble. The headers are his. The editorializing is all mine. So do not blame Niall. (more…)
When I was in university, I wanted to major in Marketing.
Reading articles like Menu Mind Games is the main reason why. I find the use of psychological tactics to manipulate human behaviour fascinating. Maybe that is why I find Behavioural Finance so much fun. (more…)
Many people think that investing is all about calculations and analysis. Poring through financial statements, expert analysis, and news releases to determine the best investments.
While true to a certain degree, investor behaviour also has a tremendous impact on portfolio returns. At times I think behaviour has more clout than either technical or fundamental analysis. (more…)
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