By Reid Kanaley The Philadelphia Inquirer
Can you trust conventional wisdom, or your gut, in financial matters? Not always. And in some cases, perhaps never, according to the economists and other experts at these sites on money.
Brain power: Harvard economics professor David Laibson has used brain scans to explore how people’s emotions affect their decision-making.
One thing he has found is that financial miscues based on convention and emotion lead to widespread problems and cost money.
Update your ideas: Do you change your oil every 3,000 miles, drink bottled water for your health, and think ceiling fans keep a room cool? You’re a sucker squandering cash, suggests this post at Bankrate.com, which lists “Six ways conventional wisdom wastes money”; is.gd/FR1nEL.
Buy and hold? Finance journalist Alison Griffiths writes about “misleading financial rules of thumb.” For her, problems include an overreliance on “buy and hold” strategies for investing and faith in the adage that “if you’re young, you can afford to take risks.”
These might be true for some people, but, says Griffiths, “take into account the realities of your own situation”’ bit.ly/yrkxVG.
Don’t sit tight: In this video, Boston University professor Zvi Bodie says conventional wisdom is wrong in investing. “Stocks are just as risky in the long run as they are in the short run,” he says.
Bodie’s video series on personal finance continues with his take on pension plans, safest investments and the danger of “sitting tight” when things are going wrong.
He is big on staying in the labor force as long as possible to delay, and increase, Social Security benefits; bit.ly/AsJD3C.