Daily Traders Edge

Want financial success in retirement? Choose wisely

October 06
14:29 2017

Americans routinely struggle with their finances. Young adults don’t save enough. Older people often fail to optimize their Social Security benefits. Investors frequently undermine their results by focusing on the wrong things.

Perhaps paying closer attention to how various financial choices are presented or “framed” could help.

Framing is a topic in behavior finance, a field that studies some of the ways people make irrational moves with their money. Framing “addresses how a reference point, often a meaningless benchmark, can affect our decision,” explained financial-researcher Morningstar in a commentary.

Morningstar provided this simple example: Suppose a person who just bought a TV set for $500 notices a competitor’s ad offering the same set for $100 less. The buyer likely would return his or her purchase and get the cheaper unit.

Continue Reading at USA Today

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