To interest me, a game must have a simple but thought-provoking premise that allows for deep strategy. I’d never played Farmville but decided to recently because the parent company, Zynga, is going public this Thursday, December 15, 2011.
True life planning begins when you realize you are unique. There will never be another you in the history of the universe. Your calling is yours alone. Understanding yourself is the first step in managing your financial affairs to support your life plan.
Here are three reasons to make time for thanksgiving during this national holiday weekend.
What makes Catan particularly interesting is that just producing the most resources is not sufficient to win the game. Knowing what mix of resources you need to meet your objectives is critical.
I love strategy games. Many people dismiss games as a waste of time. But at their best they teach principles of cause and effect that we can use as paradigms for real life.
Most of us rationalize why we can’t get our finances together right now. Many Americans prolong these excuses during their entire working careers. Here are three lies you must stop telling yourself in order to build a solid financial foundation.
Q: I am 53 years old and have never invested in the stock market. I have inherited $150,000 from a family member, and my son is recommending that I invest this money in the market. Do you agree?
David Marotta discusses behavioral finance.
Philip Zimbardo’s latest book, “The Time Paradox” suggests that understanding your own time perspective may help you unlock the secrets of financial freedom. In other words, how we think determines who we are and what we do.
David Marotta discusses how our time perspective influences our lives.
To process financial information, our minds often attempt unwise shortcuts. By understanding behavioral finance, we can limit the information we use and keep our decisions balanced and on track.
One of the early studies on herd mentality was the Solomon Asch experiments in the 1950s. The setup was a mock vision test. In reality, all but one of the participants were actors, who after a few correct answers started agreeing unanimously on a wrong choice.
Think of confidence as a continuum: Lack of confidence is paralyzing, self-confidence is good, but overconfidence is deadly. Successful investors seek to find a balance between rashness and timidity. Understanding the psychology that causes us to act overconfidently will help you avoid it.
The essence of successful financial planning is using your money to meet your life’s goals. Curiously our minds tend to fall prey to the fallacy that behavioral finance calls “mental accounting”.
Our first reaction to a complicated situation, usually instinctive, often does not serve our best interests. One heuristic that the brain uses to solve complex evaluations is to make an initial guess and then adjust from that point. This mental process is called “anchoring.”
Psychologists suggest we feel a loss about 2.5 times as much as an equivalent gain. Even with a brilliant investment plan, it takes diligence to overcome our emotional biases and avoid making investing mistakes.
Ebenezer Scrooge’s nephew Fred is the character young people most easily relate to. He is young himself, carefree, in love and enjoying life with his friends.
Investors have been told, “Invest in what you know.” While this may have been a good adage for avoiding investing in companies with no business models, it is a poor rule of thumb to use when building diversified portfolios.
Belle measures Ebenezer’s love for her by what he spends on her directly. Investments count for nothing.