It challenges the traditional assumption of rational decision-making in economics by examining why and how people make irrational financial choices. that #FF11 Behavioral finance explores how psychology affects investor decisions.
The Power of Loss Aversion-
Did you know that people tend to fear losses more than they value gains?
This is known as loss aversion, a key concept in behavioral finance. Let’s dive into the numbers!
Studies show that losses are psychologically twice as powerful as gains.
Fact: A study by Nobel Prize winners Daniel Kahneman and Amos Tversky found that the pain of losing $100 is roughly equivalent to the joy of gaining $200.
Insight: This bias can lead to irrational financial decisions, like holding onto losing investments for too long or avoiding risky, yet potentially rewarding, opportunities.
Stay tuned with hashtag#financialfridays11 for more insights into your financial behavior.
How do you handle losses? Share your thoughts in the comments!
*Source: Kahneman, D., & Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica.
Investment Decision Paralysis: Overcoming Fear for Financial Growth
Studies reveal that 60% of investors experience decision paralysis due to the overwhelming number of choices, leading to inaction. Decision paralysis can prevent you from making timely and beneficial investment decisions, resulting in missed opportunities. Simplifying your decision-making process and focusing on key factors can help you take confident and timely actions. Follow hashtag#financialfridays11 for more tips on overcoming decision paralysis. Ever found yourself stuck in decision paralysis? 🤔 Share your story in the comments below! And don’t forget to check out our Risk Calculator to help you make confident
August 7, 2024
