The Dark Side of the Power of Story Telling — Storytelling is a powerful tool — and one that is often abused. Stories — which can be factual or completely made up — shape people’s beliefs more than research and data. In this edition of “Calling Financial Bull$hit,” I review research that explains how stories manipulate people and why you…

How hindsight bias tricks you into thinking, “you knew it all along” — “Hindsight bias makes surprises vanish. “ -Daniel Kahneman They say hindsight is 20–20. Hindsight feels like it’s 20–20, but in reality, it’s closer to a funhouse mirror, providing a distorted version of reality. In this entry in the Money on my Mind series, I discuss how “hindsight bias” impacts financial…

Examining the most popular rule of thumb in retirement planning — As a rule of thumb, you should never live your life based on rules of thumb. In this edition of Calling Financial Bull$hit, I look at the most influential rule of thumb in retirement planning; the 4% rule, and decide whether the 4% rule is worthy of its popularity or…

Plus, the Gambler’s Fallacy and 3 things Homeowners ignore — Welcome back to the MOAM weekly roundup, where you get three money articles published on Making of A Millionaire delivered straight to your inbox every Wednesday. If someone forwarded you this newsletter, you can click here to subscribe. To Retire Forever (And Do the Work You Love), Stop Doing These 10 Things Written by: Eve Arnold If you have an obsession, I can’t imagine…

How the Bandwagon Effect impacts your money — “Those who follow the crowd usually get lost in it.” -Anonymous The bandwagon effect is exactly as it sounds; it describes the fact that people are more likely to do something if they know many others are doing it. The first time I became aware of the bandwagon effect was…

What goes up must come down? A myth that hurts investors — If you’ve ever spent 10 minutes at a roulette table, you’ve probably seen the following scenario play out: A gambler is trying to decide whether to put their money on Red or Black. They look at the electronic sign that shows what numbers have recently hit. They see that the…

Here’s the only way to guarantee you own the winners BEFORE they win — If you want to make money investing in the stock market, you need to be invested in the handful of stocks that will drive nearly all future returns in the stock market. That might sound like an endorsement of stock picking or investing in actively managed mutual funds. It’s quite…

It depends… On a lot of factors — Here’s a question I have never seen a comprehensive answer for by a personal finance writer before: How much money do you need to make to maximize your happiness? In a past article, I reviewed a research paper that debunked the myth that happiness peaks when someone makes $75,000 per…

How the “framing effect” impacts our financial decisions — You walk into Walmart, and you see two cans of bug spray. The first can says, “kills 99% of bugs.” The second says, “leaves 1% of bugs alive.” Odds are you will buy the first bottle because it emphasizes killing the bugs (the result you want), and the second emphasizes…