There’s a scene in The Wolf of Wall Street where Matthew McConaughey’s character gives Leonardo DiCaprio’s character some unconventional advice on how to stay calm — an imperative need to counter the stress of stock-broking life. Pop-culture portrayals of investment bankers, stockbrokers and other financial suits have made it a universally acknowledged truth that there are certain traits — of bullishness, arrogance, hardiness — that come with the territory. But why is that the case, what does that mean for their mental health, and how can we, as individual investors dipping our toes into the ..read more

Crypto coins rank among the most popular investment options today, but they’ve also emerged as a controversial asset class. The hysteria and cynicism surrounding them, and the impact of both, is a study in how investor behaviour manifests in the markets. Crypto has a low risk–reward ratio as of now, enables secure transactions, has potential for value unlocking in the future, and is a 24×7 market, which offers good scope for managing risks. But it is also unregulated, volatile, subject to scrutiny regarding its legitimacy, and unreliable during times of uncertainty or instability, as seen wi ..read more

Money choices, and more specifically investment patterns, are determined by several aspects of our life and personality, which includes (but is certainly not limited to) our age. While the principles of traditional personal finance advisory emphasise taking age into account as a crucial factor for developing investment portfolios, financial markets have witnessed noticeable shifts in the way people across ages approach their financial decisions. Many of these trends contradict the idea that age is a reliable indicator of financial behaviour. Conventional wisdom, like the ‘100 minus age’ meth ..read more

The choices we make on an everyday basis are influenced by several things — they reflect our perceptions, our previously made choices, and the consequences we’ve faced by making those choices. When the outcome works in our favour, we’re happy to take all the credit, often overlooking any initial apprehensions. But when the outcome is unfavourable, we tend to look for reasons beyond our control. Psychologists define this phenomenon as ‘hindsight bias’ — a term that addresses a peculiar cognitive error that some individuals display, which involves magnifying our abilities to foresee how a situ ..read more

In everyday transactions of late, you might’ve noticed a gradual spike in the price of fuel, groceries, or even cab fare — all of which are consequences of the depreciation of the Indian rupee. This is the fall in the value of the rupee against the US dollar owing to a rise in demand for the dollar. Like many other currencies, the rupee fluctuates in value quite often. When this happens, it not only impacts the economy of the country at large but also burns a hole in the pocket of the average consumer. Due to various factors, the value of the rupee has witnessed a 25% decline since 2014. Thi ..read more

“Mutual fund investments are subject to market risks, read all scheme-related documents carefully.” This all-too familiar warning was made mandatory in all audio-visual advertisements for mutual funds in 2013 by SEBI, the securities regulator in India. The boom in the financial markets around that time ensured that we were exposed to advertisements for mutual funds quite frequently—therefore, this five-second warning, read out rapidly, was drilled into our collective consciousness. Whether or not this has made us any wiser when it comes to choosing investments is still up for debate, but if ..read more

Traditional financial theory assumes that investors with access to complete market information make decisions based on rational factors and accurate calculations. But for decades, psychologists and economists working in the field of behavioural finance have identified loopholes in this concept. Their findings suggest that real market scenarios leave investors vulnerable and contradict rational decision-making patterns. These deviations from logic and reason are attributed to information processing errors, subjective biases, human emotions, and even socio-cultural factors. Investing decisions ..read more

What comes to mind when you think about liabilities? Is it visions of overdue bills, crushing loans, angry creditors; or more reassuring thoughts of buying a home, studying abroad, growing your business? Both scenarios are possible, but your understanding of liabilities is what determines your ability to manage them, as well as your propensity to accumulate them. If your financial and personal aspirations are more ambitious than what your current financial profile allows, then acquiring a liability might seem like the most rational option to achieve your goals. And contrary to popular though ..read more

In simple terms, personal finance is managing your own funds, assets, and liabilities. This includes planning current finances, future financial goals, and strategies to achieve these goals. Wealth creation needs proper knowledge and execution of that knowledge.  To become financially independent, it is important to possess sound knowledge of finance and its related aspects. Knowing your expenses is the first step. Most of us don’t realise how much we spend in a day. It’s important to not make unnecessary purchases, especially when you are on a tight budget.  Identify the difference ..read more

“Even the intelligent investor is likely to need considerable willpower to keep from following the crowd.” – Benjamin Graham. In recent years, the ‘Fear of Missing Out’ or FOMO as we know it, has changed the financial landscape in India for the worse. With the millennial investor sporadically jumping in and out of equities, the […] The post FOMO to ‘Oh-No!’ – Is that how you’re treating your personal finances? appeared first on 1Finance ..read more