Category: Behavioral Finance

For Financial Success, What is More Important: Habits or Goals?

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Aug 17, 2017
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Behavioral Finance, Question of the Day, Article
I think this may be my new mantra: You better have a plan to develop new habits if you are trying to achieve goals that have eluded you for years. Willpower may simply not be enough.  So, just down the road from our offices, a Stanford professor has focused his research on understanding how we can form habits. He provides a simple three step approach in this article from Quartz: According to B.J. Fogg, a psychologist and researcher at Stanford University who has studied behavior...

Schools in the News

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Aug 16, 2017
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Schools In News, Teaching Strategies, Behavioral Finance, Personal Finance, Career
Showing Students it’s OK to Not to Have it All (Jump$tart) For MaryBeth, personal finance is – personal. She began her career as a credit union teller and saw that some of her customers lacked basic financial knowledge. To help, she worked to build relationships with her customers and help them be more financially secure. She did this by explaining the difference between debit and credit, helping customers with checkbook reconciliation and loan counseling. Innovative Educator...

Question: How Risky Is The Stock Market?

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Jul 20, 2017
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Behavioral Finance, Question of the Day, Research, Index Funds, Investing, Stocks, Chart of the Week
Answer: It depends on your time horizon. Short term, it’s risky. Long-term, not so much. Great chart here (from Barclays) demonstrates how your probability of making money (“gains”) in the stock market increases the longer your time horizon: “This chart shows the proportion of gains and losses we observe for the same investment (the MSCI World Developed Equities Index) as we change our monitoring horizon from 1 day to 5 years:” Let me explain: First, the MCSI...

Question: Can Stock-Picking Make You Feel Like A Loser? The Psychology of Investing

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Jul 19, 2017
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Investing, Behavioral Finance, Current Events
Interesting read (about 5 minutes) from Of Dollars and Data that describes why passive investing is less likely to leave you with psychological scars that lead to sub-optimal decision-making: Think of it this way: If you put a sizable portion of your net worth into individual stocks, and those stocks underperform the market, this would challenge your identity. You might start to think that you were a loser because you made a choice that lost you money. This explains why investors tend to sell...

NGPF Podcast: Tim Talks To USAA Product Designer, Vikram Parekh

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Jul 16, 2017
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Behavioral Finance, Research, Investing, Savings, Podcasts, compound interest
I recently served on a panel with USAA’s Vikram Parekh at the Visa Financial Literacy Summit in Chicago. In my research for the panel, I discovered that Vikram has a really cool job at USAA, which is not your typical financial institution. Their customer base is drawn from military and their families and to say they are hyperfocused on their customers’ financial wellbeing is probably an understatement. You will hear how Vikram uses principles of behavioral finance to get...

Video: How Can We Overcome Our Behavioral Biases Against Saving?

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Jul 12, 2017
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Behavioral Finance, Question of the Day, Savings, Current Events, Video Resource, Retirement
Hat tip to Vikram Parekh of USAA (podcast upcoming) for highlighting the work of one of his favorite behavioral economists, Shlomo Benartzi of UCLA’s Anderson School of Business. In this 17 minute TED video, Shlomo highlights the hurdles to saving and how he designed a savings program (“behavioral economics on steroids”) to overcome these challenges. He provides some good examples that you might use with your students to show how our behavioral biases cause us to fall short of...

NGPF FAVORITES: Our Best OFF TO COLLEGE Resources

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Jul 07, 2017
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Activities, Credit Scores, Activity, Behavioral Finance, Career, Paying for College, Budgeting, Savings, Student Loans, Stocks, Current Events, Interactive
This month’s NGPF Favorites List comes from Sid Sharma – one of NGPF’s veteran “Power Interns” who has been with us for 3 years. Sadly, we will wish him well as he heads off to college this fall! We wanted Sid to reflect on his NGPF experience (he has literally “touched” every element in the NGPF curriculum) and highlight the resources that have enabled him to become the knowledgeable, action-oriented, process-innovator that he is today!...

NGPF Podcast: Tim Talks Behavioral Finance and Investing with Daniel Crosby

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Jul 02, 2017
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Podcasts, Behavioral Finance
If you love to learn about behavioral finance and how it can make you a better investor, then you will enjoy my recent conversation with Daniel Crosby. We delve into his early years and learn that Daniel grew up in a financially knowledgable family where his father referred to “debt” as that “d-word.” Daniel sees the world of finance through multiple lenses, given his background as a psychologist, financial advisor and author. We will go into detail about his...

Tempted to Play The Powerball Lottery? Try These NGPF Resources To Encourage Student Reflection.

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Jun 27, 2017
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Current Events, Activity, Behavioral Finance, Research, Purchase Decisions, Activities
I meant to post this earlier this month after the news of the $448 million Powerball Lottery winner from California: There is at least one winning ticket for Saturday’s $447.8 million Powerball jackpot, and California Lottery has confirmed that it was purchased in Southern California. The ticket was sold in Sun City in Riverside County, according to the lottery. It is unclear if there are winning tickets in other states. The numbers drawn were 32, 26, 20, 38, 58. The Powerball was 3....

What Are People Reading on the NGPF Blog?

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Jun 26, 2017
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Behavioral Finance, Credit Cards, Investing, Savings, Checking Accounts, Current Events, Quizzes, compound interest, Cryptocurrencies, Retirement
Getting close to the end of June, so I thought it was worth checking our website analytics to see what new blog posts are garnering attention as the school year wound down in many parts of the country. Here are the top 5: What is Bitcoin and How Does Cryptocurrency Work?: A Primer; NGPF’s newest team member, Hari Vasu-Devan tackled this challenging topic by providing educators with information they can access when the inevitable student query comes, “Should I be investing in...

Are You On the Road To Adulthood? Take the Quiz and Find Out...

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Jun 21, 2017
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Activities, Activity, Behavioral Finance, Research, Current Events
Hat tip to Jessica for pointing out this NY Times article about this concept that has recently (maybe I’m late at noticing) come into vogue, “adulting:” Rachel Ginsberg is a clinical psychologist at the NewYork-Presbyterian Youth Anxiety Center, a research and clinical program that brings together experts from NewYork-Presbyterian Hospital, Columbia University Medical Center and Weill Cornell Medicine. She is part of its Launching Emerging Adults Program aimed at teenagers and...

Question: Should We Be Teaching Financial Habits or Goals?

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Jun 15, 2017
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Behavioral Finance, Research, Teaching Strategies, Current Events, Article, Tips for Teachers
I can always count on the Farnham Street blog for thought-provoking questions. Their recent post “Habits vs Goals : A Look at the Benefits of a Systematic Approach to Life,” caught my attention because it is something I struggle with. Namely, how can I operationalize ambitious goals into day-to-day habits? Goals can often seem daunting but when you break them down into daily or frequent habitual actions they suddenly seem easier. Here’s the main takeaways from this five minute...

Do Your Weekly Lunches Cost You $90,000 in Retirement Savings?

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Jun 14, 2017
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Chart of the Week, Behavioral Finance, Budgeting, Personal Finance, Article, Math, Retirement
“US households spent $3,008, or about $8.35 a day, on average, eating out in 2015… Investing $3,008 each year… would add up 30 years later to… more than $250,000.  Similarly, investing $3.50 a day for 30 years instead of buying a latte would add up to savings of nearly $107,000”. (USA Today, June 2017) _________ We all know that it is hard to save enough for retirement.  Financial education teachers also know that students sometimes struggle to relate decisions...

Decision Tree: Active vs. Passive

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Jun 12, 2017
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Chart of the Week, Behavioral Finance, Question of the Day, Research, Index Funds, Mutual Funds, Current Events
Sometimes a simple model or flow chart elucidates a complex question. Here is one example of that principle (from Mr. Zepczynski’s blog):   Questions: What are the three questions that you have to answer in the affirmative (with a YES) in order to be an “active investor?” Which of the three questions do you think is most difficult to answer? easiest to answer? What is meant by market efficiency? Can you think of examples when the markets may NOT have been efficient? How...

What I'm Reading This Week (ending June 9th)

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Jun 09, 2017
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Current Events, Behavioral Finance, Career, Paying for College, Research, Credit Cards, Article
What are the ramifications of an aging population around the world (Visual Capitalist infographic)? Among other elements, it has neat map showing percentage of population in each state over the age of 65:  Hat tip to Hari (newest NGPF team member) for pointing out this article and interactive about robots taking over the workplace (Daily Mail): Researchers have warned that millions of human workers will be replaced by robots over the next few...

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