Behavioral Economics is the study of the effects of psychological, cognitive, emotional, cultural, and social factors on the decisions of individuals and institutions and how those decisions vary from those implied by classical economic theory.
Behaving "well as an investor is important; the less emotion, the better. Having a trusted financial advisor at One Day In July will help you stay on an objective, well-reasoned course when considering your investment plan.
Nudge vs. Sludge
Nudge is a way to steer you towards prudent investment behavior, while sludge urges you towards something that is not necessarily going to benefit you.
Ignoring the Noise
Myopic Loss Aversion: Investors who are loss-averse look at markets and their portfolios too frequently, which causes them to over-emphasize short-term dips and recent bouts of market volatility.
Traits of a Good Investor
Be skeptical and optimistic, focus on the important things not the loudest things, and remember that for most people investments are working toward a long-term goal, worrying about daily changes will just drive you crazy.
How investors behave when exposed to real-world events is an emerging field of study. Click to learn more about some behavioral recommendations and pitfalls.
Timing the Market
If you approach the market like it's a casino, the market will treat you like a gambler.
Financial stress drastically trumps stress associated with one's job, relationships, health, and other categories. So, how do we relieve financial stress?