Anchoring or the Anchoring Bias is the human tendency to evaluate or “anchor” numbers based on their presentation. Observers and participants will usually be swayed by the availability or recency of a number. Human tendency towards anchoring bias is often exploited to make subsequent facts or numbers appear in a certain light. Beware the Anchoring […]
Imposter Syndrome – or the Imposter Phenomenon – is a feeling of intellectual self-doubt where people fear exposure as a “fraud”. In the face of (often overwhelming) objective proof of competence or excellence, individuals with imposter syndrome still don’t feel deserving of praise or accolades. Although first described in high achieving women, subsequent research has […]
A common financial topic begging for answers is whether to pay down debt or invest. Over much of the internet, it is encouraged to pay down your high interest debt before investing in a Roth IRA or putting money into a 401(k) above the employer match. The difficulty has always been in defining what, exactly, […]
As has been mentioned in previous articles, people from all demographics have a taste for gambling. As Personal Finance blogger, I may not seem like the type of person who is intrigued by lottery payouts, but here in the States the recent Mega Millions drawing was estimated at a lump sum payment of $462 million. If we assume a 1 in 176 million chance to win and a 50% tax rate, the expected value of a $1 lottery ticket seems to be $1.31! Additionally, losses are tax deductible against other gambling winngs (meaning that $1 may only cost you $0.75 or less) and a significant portion goes to fund state governments, very often in the form of education subsidies.
Personal finance bloggers and personal finance connoisseurs (such as me) often feel that they have ultimate control over their actions. The belief is that if one is aware of their goals, the can reach them with the greatest of ease.
- Do you want to create an emergency fund? Spend four months building one.
- Do you want to retire at age forty? Control spending now and begin investing in tax-sheltered investment vehicles.
- Do you want to reduce your money spent on gas? Simply hypermile!
Do psychological barriers matter to you in investing?
The Dow Jones Industrial Average is poised to climb, once again, to the psychologically important level of 10,000. 10,000 has been a memory since last October. As Brett Arends of the Wall Street Journal points out, we first crossed the 10,000 barrier over 10 years ago, and the dollar has lost 23% of its purchasing power in that time. What does Dow 10,000 mean?