Concepts
This is the study of how your emotions and your brain affect the financial decisions you make.
Behavioral Finance
This term refers to a business owner selling assets like inventory or furniture immediately because they need cash
Liquefication
This financial concept is described as a "snowball effect" where your money earns bonus cash, which then earns more bonus cash
Compound Interest
This strategy involves investing a set amount of money into the market at regular intervals, such as weekly or monthly
Dollar Cost average
To save money on education, students are encouraged to buy these in used or digital formats
Textbooks
This four-letter acronym describes the "fear of missing out" that often leads to impulsive, emotional buying.
FOMO
Business owners often use liquefaction because they owe money to these people
Creditors
This famous corporate disaster serves as a warning not to "put all your eggs in one basket"
Enron Scandal
This passive investment strategy seeks to match the market rather than trying to outperform it
What is Index Investing?
The "Housing Hack" suggested in the tips involves sharing these with roommates
Accommodation expenses
This psychological trap occurs when you continue to spend time on a boring $60 video game just because you already spent the money
Sunk cost fallacy
This theory serves as a "rulebook" for how buying and selling works, explaining why items are expensive or cheap
Market Theory
If you invest $1,000 at a 10% interest rate, you will have this much total money at the end of the third year
$1331 dollars
One major "pro" of Dollar Cost Averaging is that it helps reduce these types of investment risks.
Emotional investment
In the "Budget Basics" pie chart, this category should receive 30% of your budget
Education
Noticing a chocolate bar near a checkout counter and buying it on a whim is a prime example of this type of behavior
Impulsive Buying
Market theory is driven by this "chain" which balances how much of a product exists versus how badly people want it
Supply and Demand
What is the overall trend of the stock market and around what percentage does it go up by yearly?
Upwards and 8%
A "con" of Index Investing is that it offers zero of this type of protection
Downside protection
This percentage of a student budget is recommended for "Leisure".
20%
According to the slides, when your emotions take control of your brain, you are failing to use this?
Logic
These two specific online platforms are cited as modern examples of people using liquefaction to resell items
What is Depop and Facebook Market place
In the compound interest example, the interest earned in the second year(110) is higher than the first year ($100) because of this
Interest on Interest
This disadvantage of Dollar Cost Averaging means you might have to pay these more frequently than with a single lump sum.
Transaction Fees
The largest portion of the recommended student budget (50%) is reserved for this category.
Maintenance