6 Ways Your Brain Misleads You While Handling Money


2. Mental Accountability for Potential Profit And Loss

Perceptions are not considered healthy in case of investment decisions. Often your wrong perceptions may lead to some serious investments mistakes. For example a person having a stock worth 100 will not consider himself to be in loss if the value of the stock lowers to 70 as the person didn't book it yet. Similarly if the stock price increases to 130, the person will consider it as a profit even though he didn't book it.

3. Big or Small, Money Is Money

Which offer will tempt you faster, a vegetable vendor shouts about a discount on vegetables or a 20 percent discount offer on a plasma TV? Frequently people do not consider saving money or bargaining for discount on small items like vegetables, groceries. But when it comes to costly products, even 5 percent discount is very tempting despite of the fact that small savings can also end up into big amounts at the end of the day. The entire discussion is to highlight the fact that how the brain tends to think differently in two situations while in both situations money can be saved.

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