In the previous few posts, I have touched on the topics of Anchoring Effect, Prospect Theory and Endowment Effect in the book review of Thinking, Fast and Slow by Daniel Kahneman.  Building on the concept of loss aversion, we will explore another fundamental shortcoming that may lead to irrational decisions and common financial mistakes.  A Brilliant Mistake Imagine that you are presented with the following...

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As I was raised in a frugal family, the idea that saving is a virtue has stuck with me since young. For that reason, the habit of squirreling money away in my POSB savings account came naturally to me.  So when people around me eventually refuted my belief and pointed out that the purchasing power of my savings was being eroded by inflation, I have...

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