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Personal Finance--Behavioral Char.


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These people are usually clergy and social workers.
Evaluation Stage
The life stage when contemplation of the sum total of one's life here on earth. 60 years and older
20 weeks
How long can rationality last in the markets?
These people never have enough nurturance, have increasing feelings of dependence and helplessness, and believe that having more money will result in their becoming less lovable.
Loss Aversion
Every investor abhors the idea of losing money more than he or she prizes the idea of making money.
Representational Maps
People develop these through personal representations of experience and assume they are the same as reality.
These are usually entertainers and salesmen.
Behavioral Finance
Originally set forth by Amos Tversky and Daniel Kahneman who developed a theory of biasness called loss aversion.
Estimated future probability is a function of the information that resides in your memory.
Discovery Stage
The life stage that includes money and property serving as the medium through which people send and receive information in order to evaluate other people and evaluate themselves. 20-30 years old
These people cannot bear for things to be out of control, are uncomfortable if there is too much stimulation, and like high structure and low risk.
Contagious Enthusiasm
When an investment is hot, the simplest mental short-cut is to follow the crowd.
Estimated future probability is a function of similarity to past events.
These people may invest from time to time but they are likely to raid their accounts impulsively and invest in risky ventures. They tolerate risk well.
These people will generally save more than Expressives and Amiables and can be expected to tap their retirement accounts for what they consider important or profitable short-term opportunities.
Effectance Stage
The life stage where the adult has achieved expertise and is concentrating on his or her career, relationships and other adult activities such as raising their children. 30-45 years old
People rely on a limited number of cognitive shortcuts that simplify the complex task of assessing probabilities in an uncertain world.
Modeling Stage
The life stage when people become interested in passing their wisdom and their property on to the next generation. 45-60 years old
These people tend to avoid budgets, do not want to be boxed in, rebel against rules and regulations, tend to spend for the sake of self-image and enjoy risk.
These people are usually military and entrepreneurs.
Representation Maps
The best serve the client, a financial planner must assess the client's __________________ as it relates to the financial planning engagement.
Small vs. Large Samples
Investors tend to place significant, but inappropriate faith, in small samples.
These people have a tendency to save more systematically than the other types and are generally more risk adverse causing them to invest in more conservative investments that are ravaged by inflation.
These are usually accountants and scientists.
These people abhor nurturance, buy, compete, and exploit, and they make sure the world knows of their accomplishments.
These people will generally defer to a partner's savings plan and are generally more risk adverse.

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