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Financial psychology

Financial psychology

 ... is a somewhat overlooked discipline that occupies the space between psychology and behavioral economics. Advertisers and marketers trying to tempt us to spend money are well aware of it.

If we understand how the financial environment affects us, we can better control our cash instead of being controlled by it, turning us into more rational investors, more successful savers or less impulsive shoppers.

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Does shopping make you happy? Do you frequently buy your loved ones presents “just because” and blow the budget at Christmas and birthdays? You could be a social value spender.

Lovers of risk, anxious investors trade frequently and believe they have the edge over others. Many have absolutely no idea what their returns actually were and only remember their good decisions.

Cash splashers view themselves as generous, but they also use the money to make others think more highly of them. 

They check their online bank balance and track their spending as often as someone training for an extreme sporting event measures their calorie intake, resting heart rate and sleep quality. 

For hoarders, money represents security. They abhor risk and may even stockpile cash that they would probably be better off investing — or even spending.

Someone who would rather bury their heads in the sand than organize their finances.  “Making no decision always feels easier than the possibility of making the wrong decision.” 

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Every investor’s principal goal is to reduce all possible investment risks while simultaneously increasing investment opportunities. Learn all about diversification and untold secrets. This will help anyone start their investment journey.

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