Why You Should Raise Millionaire Children - Part 1
.Why You Should Raise Millionaire Children - Part 1
By Jerry Norton
Recently, good friend and parenting expert Nicholeen Peck invited me to be a guest on a weekly group call she conducts with parents. She asked if I’d share some ideas for teaching children about money and wealth.
As a home school father of six, entrepreneur and real estate investor, this is a topic very near and dear to me. I accepted her invitation, but was a little apprehensive as to how my message would be received. In my business I train individuals from all over the world on how to invest in real estate. Typically, the people I work with are eager to improve their financial situation — get out of debt, quit going to a job they hate, and start making money doing something they enjoy. Some are looking for a better lifestyle and others are looking for a way to speed up retirement.
Almost all want more time to pursue their goals and dreams and they realize that money plays a vital role in accomplishing them. In my training programs it is very natural and appropriate to talk about money, investing and wealth creation.
Why You Should Raise Millionaire Children - Part 1
By Jerry Norton
Recently, good friend and parenting expert Nicholeen Peck invited me to be a guest on a weekly group call she conducts with parents. She asked if I’d share some ideas for teaching children about money and wealth.
As a home school father of six, entrepreneur and real estate investor, this is a topic very near and dear to me. I accepted her invitation, but was a little apprehensive as to how my message would be received. In my business I train individuals from all over the world on how to invest in real estate. Typically, the people I work with are eager to improve their financial situation — get out of debt, quit going to a job they hate, and start making money doing something they enjoy. Some are looking for a better lifestyle and others are looking for a way to speed up retirement.
Almost all want more time to pursue their goals and dreams and they realize that money plays a vital role in accomplishing them. In my training programs it is very natural and appropriate to talk about money, investing and wealth creation.
However, money and wealth are topics rarely discussed in academics or in the home. In fact, in too many homes and classrooms, money is actually demonized and demoralized, even if unintentionally. I’m amazed at how our educational system, and many of today’s parents, still cling to the Industrial Age model of: go to school, get good grades, play it safe and work for a company your whole life and someday retire with a pension and benefits. The problem with this model is it is behind the times. We now live in the Information Age with a new set of rules — rules that are being redefined more quickly than all other ages combined.
Whether you like it or not – or agree with it or not – our children need to be prepared for a future that is far different from the past.
The ideas behind succeeding in the Information Age challenge beliefs most of us have come to accept. You may be thinking, “Hey these beliefs served my parents and grandparents so why change now?” Many parents I encounter disagree with some of the ideas I present. They are dismissed as risky or radical or only available for a select few.
The fact of the matter is that opportunity exists for each of us. There are more millionaires and billionaires created everyday than ever before – despite the negative perception of the economy we see in the media. Even though I know many will turn away from these concepts, some parents will accept them, embrace them and teach them to their children, giving them a huge head start in life.
My intention in writing this is to help you, a parent, grandparent or anyone who has an influence on children to recognize the vital role you have in helping kids develop a healthy mindset about money. You can free them to grow into adulthood without the negative associations that we so often instill at an early age.
To continue reading, please go to the original article here:
https://flippingmastery.com/why-you-should-raise-millionaire-children-pt-1
18 Favorite Financial Rules Of Thumb
.18 Favorite Financial Rules Of Thumb (and some useful money guidelines)
By J.D. Roth
Financial Rules of ThumbAfter twelve years of reading and writing about money, I’ve come to love financial rules of thumb.
Financial rules of thumb provide helpful shortcuts for making quick calculations and decisions. You don’t always have time (or want to take the time) to create elaborate spreadsheets when choosing a course of action. In these cases, it’s nice to have some rough guidelines you can rely on.
You’ve probably heard of the “rule of 72”, for example. This shortcut says that if you divide 72 by a particular rate of return, you’ll get the number of years it’ll take to double your money. If your savings account yields 4%, say, it will take about 18 years for your nest egg to increase by 100%. But if you were able to earn 12% on your investment, that money would double in six years.
Like all rules of thumb, the rule of 72 isn’t precise. It doesn’t give an exact answer but a ballpark figure. Financial rules of thumb don’t always hold true. But they’re true enough for us to make loose plans based on them.
18 Favorite Financial Rules Of Thumb (and some useful money guidelines)
By J.D. Roth May 2018
Financial Rules of ThumbAfter twelve years of reading and writing about money, I’ve come to love financial rules of thumb.
Financial rules of thumb provide helpful shortcuts for making quick calculations and decisions. You don’t always have time (or want to take the time) to create elaborate spreadsheets when choosing a course of action. In these cases, it’s nice to have some rough guidelines you can rely on.
You’ve probably heard of the “rule of 72”, for example. This shortcut says that if you divide 72 by a particular rate of return, you’ll get the number of years it’ll take to double your money. If your savings account yields 4%, say, it will take about 18 years for your nest egg to increase by 100%. But if you were able to earn 12% on your investment, that money would double in six years.
Like all rules of thumb, the rule of 72 isn’t precise. It doesn’t give an exact answer but a ballpark figure. Financial rules of thumb don’t always hold true. But they’re true enough for us to make loose plans based on them.
I have some engineer friends who’d get tense at this sort of sloppy guesswork, but most of the rest of us are happy to trade a bit of precision for speed. That’s what rules of thumb are all about! The trick, of course, is knowing which rules of thumb to use. Most are handy, but some common guidelines do more harm than good.
Rules Gone Wild
In the past, you’ve probably seen my rant about some of my most-hated financial rules of thumb. Let’s look at three things I think conventional wisdom gets wrong (and what I believe are better alternatives).
How much should you save for retirement?
For instance, I get frustrated when I hear financial advisers push the idea that you should base your retirement savings on 70% of your income. Instead of estimating your retirement needs from your income, it makes far more sense to base them on spending. Your spending reflects your lifestyle; your income doesn’t.
I think a better rule of thumb for determining retirement needs is this: When estimating how much you’ll need to save for retirement, assume you’ll spend as much in the future as you do now. Use 100% of your current expenses to calculate your retirement spending. (And if you want to build in a safety margin, base your future needs on 110% of your current spending.)
How much should you spend on a house?
As I mentioned last week, another rule of thumb that makes me cranky is this common guideline espoused by all sectors of the homebuying industry: “Buy as much home as you can afford.” No no no no no! Of all financial rules of thumb, this is probably the worst. It’s certainly one of the most prevalent. This is how folks end up house poor, chained to a mortgage they resent.
To continue reading, please go to the original article here:
10 Questions to Ask Yourself As An Aspiring Millionaire
.10 Questions to Ask Yourself As An Aspiring Millionaire
Most accomplished individuals and millionaires often find the best way to navigate to success is by questioning the status quo. This isn’t just about asking numerous, random questions or simply being contradictory. This will only waste time and energy, which are valuable assets that could be better served elsewhere in your business and life.
Instead, remember the key to success is knowing the right questions to ask. These are instrumental in developing positive daily habits that reinforce your goals and objectives.
10 Questions to Ask Yourself As An Aspiring Millionaire
Most accomplished individuals and millionaires often find the best way to navigate to success is by questioning the status quo. This isn’t just about asking numerous, random questions or simply being contradictory. This will only waste time and energy, which are valuable assets that could be better served elsewhere in your business and life.
Instead, remember the key to success is knowing the right questions to ask. These are instrumental in developing positive daily habits that reinforce your goals and objectives.
10 Questions to Ask Yourself As An Aspiring Millionaire
By Anum Yoon
Formulate the questions so you can revisit them periodically as you grow and change. Reviewing and regrouping will help you develop a positive habit of self-evaluation – a key characteristic for growth, development and advancement.
Here is a list of 10 questions you can use as a daily, weekly or monthly checklist:
1) Why Do I Want to Be a Millionaire?
This may seem like a silly question, but wanting to be a millionaire and really understanding the why of it are extremely different. In order to achieve something, you must really understand the reason you want to achieve it.
Wanting to be a millionaire just to have a lot of money probably won’t provide you with the necessary drive to achieve it. Sorry.
Instead, really work through the why behind your goals:
Do you want to be a millionaire for financial stability?
To travel more?
To have more freedom?
To give back to society?
Simon Sinek gives a great TED talk about the importance of a well-defined why in successful business, and the difference it makes. It may help you sort out your own.
To continue reading, please go to the original article here:
What’s Your Whetstone?
.What’s Your Whetstone?
By Thomas C. Corley
“Give me six hours to cut down a tree, and I will spend the first four hours sharpening my axe.” – Abraham Lincoln
What sharpens your axe?
It’s an important question because it gets to the core of what is required in order to become rich and successful.
I have spent over a decade studying self-made millionaires. The one common denominator they all seemed to have were daily habits or daily routines that enabled them to sharpen their axe by consistent daily self-improvement.
Most of that improvement was related to their business, careers or vocation. But many of those self-improvement habits also included keeping fit and healthy and little secrets they deployed to build relationships with other rich , successful people.
What’s Your Whetstone?
By Thomas C. Corley
What’s Your Whetstone?
“Give me six hours to cut down a tree, and I will spend the first four hours sharpening my axe.” – Abraham Lincoln
What sharpens your axe?
It’s an important question because it gets to the core of what is required in order to become rich and successful.
I have spent over a decade studying self-made millionaires. The one common denominator they all seemed to have were daily habits or daily routines that enabled them to sharpen their axe by consistent daily self-improvement.
Most of that improvement was related to their business, careers or vocation. But many of those self-improvement habits also included keeping fit and healthy and little secrets they deployed to build relationships with other rich , successful people.
Because I had a front row seat that allowed me to peer into the minutia of the daily lives of the rich and poor, I learned that those who were constantly sharpening their ax happened to also be the richest and most successful individuals.
So, in an effort to become rich, I took a page out of the book of these self-made millionaires and decided to create my own whetstone to sharpen my own axe.
For me, my whetstone is a proven process that has become my morning routine, or set of habits:
I wake at 5am each day (Habit) – 25% of the time I wake up at 4am. 25% of the time I wake up at 5:30 am.
I get my coffee (Habit) and go down to my “Hole” (basement office).
I review my Word List for 15 minutes (Habit) – My Word List is a list of words I am committing to memory.
I review my Facts Summary or Study Summary for 15 minutes (Habit). My Facts Summary are important facts I feel it is important to know. My Study Summary is a summary of the thousands of studies I’ve poured through over the years that make their way into media articles and my books.
To continue reading, please go to the original article here:
The Underrated Skill You Really Need to Succeed
.The Underrated Skill You Really Need to Succeed
Three Billionaires Reveal the Underrated Skill You Really Need to Succeed (and It’s Not Intelligence)
By Brooke Nelson
And you don't need an expensive degree to learn it either. Turns out, your mom was totally wrong. There IS a secret to success! So forget everything you’ve been told about meditation, exercise, or productivity. The real answer is way simpler than you originally thought.
According to billionaires Bill Gates, Richard Branson, and Warren Buffett, there’s just one essential skill you need to be successful: communication.
That’s it! Easy, right?
This-is-the-One-Crucial-Skill-You-Need-to-be-Successful,-According-to-Three-Billionaires
The Underrated Skill You Really Need to Succeed
Three Billionaires Reveal the Underrated Skill You Really Need to Succeed (and It’s Not Intelligence)
By Brooke Nelson
And you don't need an expensive degree to learn it either. Turns out, your mom was totally wrong. There IS a secret to success! So forget everything you’ve been told about meditation, exercise, or productivity. The real answer is way simpler than you originally thought.
According to billionaires Bill Gates, Richard Branson, and Warren Buffett, there’s just one essential skill you need to be successful: communication.
That’s it! Easy, right?
This-is-the-One-Crucial-Skill-You-Need-to-be-Successful,-According-to-Three-Billionaires
Well, maybe not. Communication issues are common in any group setting, and that goes for lots of different mediums: interpersonal, organizational, and even nonverbal. (Don’t miss these signs you can’t trust your co-worker.)
But being a good communicator is essential if you want to get ahead; research by the Carnegie Institute of Technology shows that only 15 percent of financial success comes from knowledge or skills, while the other whopping 85 percent comes from the ability to effectively communicate, negotiate, and lead.
Plus, if the world’s most successful billionaire entrepreneurs have already confirmed the importance of communication, we should take heed!
Here’s the scoop: Ten years ago, Microsoft co-founder Bill Gates said in a BBC News interview, “Communication skills and the ability to work well with different types of people are very important … software innovation, like almost every other kind of innovation, requires the ability to collaborate and share ideas with other people, and to sit down and talk with customers and get their feedback and understand their needs.”
To continue reading, please go to the original article here:
Private Banking Versus Wealth Management
.Private Banking Versus Wealth Management
By Julia Hawley
Private banking and wealth management are terms that overlap. However, the financial services offered through private banking and through wealth management differ slightly.
Wealth management is a broader category that involves dealing with the optimization of a client's portfolio, taking into account his aversion to, or comfort with, risk, and investing financial assets according to his plans and goals. Wealth management can be practiced on a portfolio of any size (though, as the name implies, it's geared toward the well-off: There must be some money to manage in the first place).
Private banking, by comparison, typically refers to an envelope solution for high-net-worth-individuals (HNWIs) wherein a public or private financial institution employs staff members to offer high-net-worth clients personalized care and management of their finances.
Private Banking Versus Wealth Management
By Julia Hawley
Private banking and wealth management are terms that overlap. However, the financial services offered through private banking and through wealth management differ slightly.
Wealth management is a broader category that involves dealing with the optimization of a client's portfolio, taking into account his aversion to, or comfort with, risk, and investing financial assets according to his plans and goals. Wealth management can be practiced on a portfolio of any size (though, as the name implies, it's geared toward the well-off: There must be some money to manage in the first place).
Private banking, by comparison, typically refers to an envelope solution for high-net-worth-individuals (HNWIs) wherein a public or private financial institution employs staff members to offer high-net-worth clients personalized care and management of their finances.
The Primary Difference
The primary difference between private banking and wealth management is that private banking does not always deal with investing. Private bank staff may offer clients guidance on certain investment options, but not all banks will be involved in the actual process of investing assets for their clients. Most clients utilizing private banking services open deposit accounts of one kind or another.
Wealth management employees, including financial advisors, provide advice to clients to help them improve their financial standing and assist clients in investing assets with the goal of generating high returns. In general, private banking can extend to encompass wealth management, but wealth management firms cannot provide clients with private banking facility services.
Private Banking
In general terms, private banking involves financial institutions that provide financial management services to HNWIs. In some instances, an individual may be able to obtain these services with assets less than $100,000, but most private banks (or private bank divisions) set a benchmark of at least six figures.
Private banking tends to be exclusive and is reserved for clients with substantial amounts of cash and other assets to be deposited into accounts and to be invested.
Private banking provides investment-related advice and aims to address the entire financial circumstances of each client. Private banking services typically aid clients in protecting and maintaining their assets.
To continue reading, please go to the original article here:
The “Real” Advantage Of Being Wealthy
.The “Real” Advantage Of Being Wealthy
By Mr. Tako
There’s a myth being propagated about the wealthy (mostly by movies, social media, and television) and it goes a little something like this:
When you become wealthy you can buy whatever you want, and you won’t need to work anymore. Life is one big vacation — filled with trips to the Bahamas, fancy sports cars, mansions, luxury hotels, and nice restaurants.
Maybe you’ve seen or heard this myth before. It’s pretty common. The emphasis is on the spending. Those mental images about being wealthy are what I call wealth porn. It’s the plastic-fantastic version of wealth made to look sexy and appealing. It’s also mostly fake. As the Millionaire Next Door teaches us, the vast majority of millionaires actually live pretty humble lifestyles. They live pretty much like everyone else.
The “Real” Advantage Of Being Wealthy
By Mr. Tako
There’s a myth being propagated about the wealthy (mostly by movies, social media, and television) and it goes a little something like this:
When you become wealthy you can buy whatever you want, and you won’t need to work anymore. Life is one big vacation — filled with trips to the Bahamas, fancy sports cars, mansions, luxury hotels, and nice restaurants.
Maybe you’ve seen or heard this myth before. It’s pretty common. The emphasis is on the spending. Those mental images about being wealthy are what I call wealth porn. It’s the plastic-fantastic version of wealth made to look sexy and appealing. It’s also mostly fake. As the Millionaire Next Door teaches us, the vast majority of millionaires actually live pretty humble lifestyles. They live pretty much like everyone else.
But that’s not to say there aren’t advantages to being wealthy. There are A LOT of advantages to being wealthy. The problem is, those advantages don’t get talked about very often. Instead, the media simply propagates the wealth porn version.
If that’s the version of wealth you’re hot and horny for — Well, there’s the Rich Kids Of Instagram for that.
As a millionaire myself, I already know how useless a flashy lifestyle is. I’m more interested in the advantages that wealth brings.
The “How You Earn” Advantage
When you’re poor, trading your time for money is the normal way to get by. It’s how most folks afford food, shelter, healthcare, and all the necessities of life. This is considered a perfectly acceptable way to live. If you’re not careful however, you could end-up trading too much of your precious time. You might even die at your desk.
Don’t trade too much of your time for money. You could die at your desk working. I’ve seen it happen.
To continue reading, please go to the original article here:
My Mama Always Told Me – You Better Have Your Own Money
.My Mama Always Told Me – You Better Have Your Own Money
MadMoney Monster
Warning: This post recounts a tale of hardcore MOM advice from yesteryear.
Moms, they’re funny creatures, aren’t they? They lecture us about not getting enough sleep, they threaten to not babysit when we ignore them for too long, they give us constant unsolicited advice on parenting, marriage, and cooking. And yet, no one in the world loves us more.
Recently, I’ve been thinking about all of the advice my mom gave me as I was growing up. Looking back on it, that advice certainly did shape my thoughts and the way in which I operate in this world. Today, I’m going to share a piece of pillar advice I heard from my mom over and over again – “Always have your own money!”
My Mama Always Told Me – You Better Have Your Own Money
MadMoney Monster
Warning: This post recounts a tale of hardcore MOM advice from yesteryear.
Moms, they’re funny creatures, aren’t they? They lecture us about not getting enough sleep, they threaten to not babysit when we ignore them for too long, they give us constant unsolicited advice on parenting, marriage, and cooking. And yet, no one in the world loves us more.
Recently, I’ve been thinking about all of the advice my mom gave me as I was growing up. Looking back on it, that advice certainly did shape my thoughts and the way in which I operate in this world. Today, I’m going to share a piece of pillar advice I heard from my mom over and over again – “Always have your own money!”
First, let me preface this by saying, I completely understand that not everyone lives this way. And that’s okay. The purpose of this post is to enlighten and entertain. I am in no way suggesting that EVERYONE should always have their own money because my mom said so. Now, with that said, let’s dig into why my mom told me that and how it has affected my life in a positive way. Here we go!
ALWAYS HAVE YOUR OWN MONEY
So just what did my mom mean by telling me to always have my own money? She meant exactly that – Always Have Your Own Money. In other words, I should strive to always be able to support myself, regardless of what circumstance life decides to throw my way. And regardless of what circumstances I get myself into.
Parents always have their children’s best interests at heart. They want their children to Do More and Be More. Their wish is for their children to always be happy, healthy, and never experience discomfort. And, they hope their children have plenty of money and enter into solid, well-suited relationships. But let’s face it, all these hopes and dreams and wishes don’t always take shape. And when they don’t, it’s nice to have, you guessed it…Money.
Money obviously isn’t a cure-all, but it sure does offer up some wonderful options when life throws you a curveball. With money, you can endure the emotional stresses of a difficult time without having to worry about how you’re going to pay the mortgage or buy groceries. With money, you have the luxury of taking a breather and contemplating your next move. This is something my mother never had.
To continue reading, please go to the original article here:
https://madmoneymonster.com/2017/10/11/my-mama-always-told-me-you-better-have-your-own-money/
Wealth vs Money
.Wealth vs Money
By Max Price
Wealth is comprised not only of money, but of 3 things:
Meaningful relationships and family Health / Fitness Freedom
There are people with tens of millions of dollars who are not wealthy, because they are depressed and miserable. They could be rich but have wasted their health, their relationships or given up their freedom.
Having money only increases your wealth if you use the money wisely to obtain the other parts of the wealth equation: health and meaningful relationships.
But if you have money, it makes obtaining those things exponentially easier, which is why it’s not a bad place to start.
Wealth vs Money
By Max Price
Wealth is comprised not only of money, but of 3 things:
Meaningful relationships and family Health / Fitness Freedom
There are people with tens of millions of dollars who are not wealthy, because they are depressed and miserable. They could be rich but have wasted their health, their relationships or given up their freedom.
Having money only increases your wealth if you use the money wisely to obtain the other parts of the wealth equation: health and meaningful relationships.
But if you have money, it makes obtaining those things exponentially easier, which is why it’s not a bad place to start.
How to get rich: A look at conventional wisdom
Conventional wisdom says to get good grades, go to a good school, get a job, and get promotions and one day you’ll be successful.
However, what they don’t tell you is that vast majority of people who follow this advice never end up becoming rich or even close, instead they reach their salary cap of $80k or worse, they end up living paycheck to paycheck.
Some of the problems of the conventional wisdom include:
Most companies will not keep raising your salary in proportion to your work output. Even if your work output is 5x of others in the workplace, you may still not even be able to receive 200% of your current salary.
You can not reliably work more hours than a certain maximum per week. If you raise your hours to make overtime, you will have to make sacrifices in other areas of your life, and risk burning out as well.
You’re at the mercy of your boss, the economy, the stock market, etc. and will have to face the risk of getting laid off or your skillset becoming obsolete in the future.
Instead what you can do is “retire when you’re still young” and plan out to do your bucket list items while your body is still energetic and can enjoy the experience.
Becoming a millionaire
To continue reading, please go to the original article here:
34 Hard Truths You Should Know Before Becoming “Successful”
.34 Hard Truths You Should Know Before Becoming “Successful”
1. It’s Never As Good As You Think It Will Be
“One of the enemies of happiness is adaptation,” says Dr. Thomas Gilovich, a psychology professor at Cornell University who has studied the relationship between money and happiness for over two decades.“We buy things to make us happy, and we succeed. But only for a while. New things are exciting to us at first, but then we adapt to them,” Gilovich further states.
Actually, savoring the anticipation or idea of the desired outcome is generally more satisfying than the outcome itself. Once we get what we want — whether that’s wealth, health, or excellent relationships — we adapt and the excitement fades. Often, the experiences we’re seeking end up being underwhelming and even disappointing.
I love watching this phenomenon in our foster kids. They feel like they need a certain toy or the universe will explode. Their whole world revolves around getting this one thing. Yet, once we buy the toy for them, it’s not long before the joy fades and they want something else.
34 Hard Truths You Should Know Before Becoming “Successful”
Benjamin Hardy, PhD
1. It’s Never As Good As You Think It Will Be
“One of the enemies of happiness is adaptation,” says Dr. Thomas Gilovich, a psychology professor at Cornell University who has studied the relationship between money and happiness for over two decades.“We buy things to make us happy, and we succeed. But only for a while. New things are exciting to us at first, but then we adapt to them,” Gilovich further states.
Actually, savoring the anticipation or idea of the desired outcome is generally more satisfying than the outcome itself. Once we get what we want — whether that’s wealth, health, or excellent relationships — we adapt and the excitement fades. Often, the experiences we’re seeking end up being underwhelming and even disappointing.
I love watching this phenomenon in our foster kids. They feel like they need a certain toy or the universe will explode. Their whole world revolves around getting this one thing. Yet, once we buy the toy for them, it’s not long before the joy fades and they want something else.
Until you appreciate what you currently have, more won’t make your life better.
2. It’s Never As Bad As You Think It Will Be
Just as we deceive ourselves into believing something will make us happier than it will, we also deceive ourselves into believing something will be harder than it will.
The longer you procrastinate or avoid doing something, the more painful (in your head) it becomes. However, once you take action, the discomfort is far less severe than you imagined. Even to extremely difficult things, humans adapt.
I recently sat on a plane with a lady who has 17 kids. Yes, you read that correctly. After having eight of her own, she and her husband felt inspired to foster four siblings whom they later adopted. A few years later, they took on another five foster siblings whom they also adopted.
Of course, the initial shock to the system impacted her entire family. But they’re handling it. And believe it or not, you could handle it too if you had to.
The problem with dread and fear is that it holds people back from taking on big challenges. What you will find — no matter how big or small the challenge — is that you will adapt to it.When you consciously adapt to enormous stress, you evolve.
3. There Is No Way To Happiness
“There is no way to happiness — happiness is the way.”— Thich Nhat Hanh
To continue reading, please go to the original article here:
https://benjaminhardy.com/35-hard-truths-you-should-know-before-becoming-successful-2/
Real Or Fake News? How Confirmation Bias Can Affect Your Wealth
.Real Or Fake News? How Confirmation Bias Can Affect Your Wealth
ValueWalk.com Jun 23, 2020,
Last year, financial advisers identified confirmation bias as the third most significant behavioral bias affecting their clients’ investment decisions. How can you keep confirmation bias from creeping into your investment strategy?
In 2018, former New York mayor Rudolph Giuliani, serving as President Trump’s attorney, made headlines when he commented that President Trump should not have to submit to an interview by special counsel Robert Mueller as part of the Russia investigation. “Truth isn’t truth,” Giuliani said in an interview with NBC’s Meet the Press, causing host Chuck Todd to react with incredulity. The controversial quote went on to lead a Yale Law School librarian’s list of the most notable quotes of the year.
Despite what you may think of Giuliani or his comment, his assertion that people have different versions of the truth holds some merit. Confirmation bias, defined as the tendency to seek information that reinforces a person’s pre-existing beliefs, suggests that people may not always be objective, or think critically, before accepting information as fact.
Real Or Fake News? How Confirmation Bias Can Affect Your Wealth
ValueWalk.com Jun 23, 2020
Last year, financial advisers identified confirmation bias as the third most significant behavioral bias affecting their clients’ investment decisions. How can you keep confirmation bias from creeping into your investment strategy?
In 2018, former New York mayor Rudolph Giuliani, serving as President Trump’s attorney, made headlines when he commented that President Trump should not have to submit to an interview by special counsel Robert Mueller as part of the Russia investigation. “Truth isn’t truth,” Giuliani said in an interview with NBC’s Meet the Press, causing host Chuck Todd to react with incredulity. The controversial quote went on to lead a Yale Law School librarian’s list of the most notable quotes of the year.
Despite what you may think of Giuliani or his comment, his assertion that people have different versions of the truth holds some merit. Confirmation bias, defined as the tendency to seek information that reinforces a person’s pre-existing beliefs, suggests that people may not always be objective, or think critically, before accepting information as fact.
Let’s take an example from recent coverage of President Trump’s rally in Tulsa, Oklahoma. What is “true” about the reason why attendance at the event seemed lower than anticipated? Was it that protesters blocked the entrances and warnings by the media of exposure to COVID-19 kept people away? Was it because TikTok users and K-pop fans successfully mounted a campaign to horde tickets to the event?
Or was it because the Tulsa Fire Department miscounted the attendees, giving the impression that rally-goers filled less than a third of the BOK Center’s capacity, while campaign officials recorded roughly double the number of people who passed through its metal detectors?
In this situation, your “truth” may depend on the sources of information you trust. Conservatives may favor reporting by Fox News or Breitbart, while liberals may believe outlets like CNN or the New York Times.
But maybe you don’t trust media reports of any kind. Studies suggest that constant challenges to the validity of traditional news outlets has denigrated its authority, creating opportunities for non-journalistic outlets to take their place and encourage the spread ideologically extreme, false or misleading content through social media. When social media users choose to filter what they see in their feed based on their values and beliefs, the potential for confirmation bias increases.
Is it really "fake news?"
To continue reading, please go to the original article here:
https://www.valuewalk.com/2020/06/confirmation-bias-wealth-affect/