Financial psychology is part of the field of behavioral economics, a burgeoning social science first recognized with the award of a Nobel Prize in Economics in 2002 to Daniel Kahneman, and again in 2017 with the prize awarded to Richard Thaler.
A practical benefit of behavioral economics is that investors can take assessments to understand their personal financial personality traits. Are you a risk taker? Will you follow through on a long-term plan? These are financial personality traits that behavioral economics helps you identify and manage.
With traditional price-to-earnings valuation benchmarks broken and growing concerns about a bubbly market, it’s important to keep the speculative nature of excitement-seekers in check. If you think you may be prone to taking excessive risk, the current economic boom makes it an opportune moment to assess your unique investor personality traits. Please let us know if you would like to take a free personal financial identity assessment.