Category - Investing

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The ABCs of Behavioral Biases (S–Z)
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The ABCs of Behavioral Biases (O–R)
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“It’s Greek to Me!” – Understanding the Meat in Your Investment Statements
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ABCs of Behavioral Biases; An Introduction
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5 No-No’s for IRA Investing

The ABCs of Behavioral Biases (S–Z)

We’re coming in for a landing on our alphabetic run-down of behavioral biases. Today, we’ll present the final line-up: sunk cost fallacy and tracking error regret.

Sunk Cost Fallacy

What is it? Sunk cost fallacy makes it harder for us to lose something when we also face losing the time, energy or money we’ve already put into it. In “Why Smart People Make Big Money Mistakes,” Gary Belsky and Thomas Gilovich describe: “[Sunk cost fallacy] is the primary reason most people would choose to risk traveling in a dangerous snowstorm if they had paid for a ticket to …

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The ABCs of Behavioral Biases (O–R)

So many financial behavioral biases, so little time! Today, let’s take a few minutes to cover our next batch of biases: overconfidence, pattern recognition and recency. 

Overconfidence

What is it? No sooner do we recover from one debilitating bias, our brain can whipsaw us in an equal but opposite direction. For example, we’ve already seen how fear on the one hand and greed on the other can knock investors off course either way. Similarly, overconfidence is the flip side of loss aversion. Once we’ve got something, we don’t want to lose it and will overvalue it compared to its going …

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“It’s Greek to Me!” – Understanding the Meat in Your Investment Statements

By Eve Kaplan, Certified Financial Planner™

When you look at your monthly investment statement, do you think “this looks like Greek to me”? Do you ignore all but the first page, after checking to see how much money you “made” or “lost” last month? If so, you’re in good company.  However, there’s a lot of meat in your investment statements so here’s a deep dive into some of the important elements:

  1. Don’t just compare changes in account value this month (vs. last month), be aware of sub-components that add or subtract value each month: e.g. “dividends and interest,” “market appreciation/depreciation”
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ABCs of Behavioral Biases; An Introduction

By now, you’ve probably heard the news: Your own behavioral biases are often the greatest threat to your financial well-being. As investors, we leap before we look. We stay when we should go. We cringe at the very risks that are expected to generate our greatest rewards. All the while, we rush into nearly every move, only to fret and regret them long after the deed is done.

Why Do We Have Behavioral Biases?
Most of the behavioral biases that influence your investment decisions come from myriad mental shortcuts we depend on to think more efficiently and act more effectively …

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5 No-No’s for IRA Investing

It is generally well-known that in an IRA account you have a wide range of investment choices. These choices are typically only limited by the custodian’s available investment options.  However, there are specific prohibited transactions that cannot be accomplished with IRA funds. Often these prohibited transactions can cause your IRA to be disqualified, which can result in significant tax and penalty, along with loss of the tax-favored status of the funds.

What’s Not Allowed for IRA Accounts?
  1. Self-Dealing.  You are not allowed, within your IRA, to make investments in property which benefits you or another disqualified person.  A disqualified person
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