Topic: Behaviour
16 posts tagged “Behaviour”.
The Cost of Doing Nothing
No plan is itself a decision — one that loads delay, cost and friction onto the people you leave behind. The price of inaction is paid in time, money and family strain.
Lapsing and Surrender: The Hidden Cost of Quitting Early
Whole-life and investment-linked policies are built to be held for decades. Give one up in the early years and you often get back far less than you paid — a cost few people see when they buy.
Mis-Selling: Warning Signs to Watch For
Most insurance advisers are professional and helpful. But a few sales tactics are reliable warning signs that a product is being pushed for the seller's benefit rather than yours. Learn to spot them.
Over-Insurance: Paying for Cover You Don't Need
Being under-insured is the obvious danger. But over-insurance is a quieter, more common drain — premiums spent on cover that duplicates what you have, or insures risks you could easily absorb.
Investment-Linked Policies: How They Work
Investment-linked policies promise protection and investment in one product. Understanding where the money goes — and what it costs — explains why many advisers favour keeping the two jobs separate.
Why Bundling Insurance With Investing Usually Costs More
The deeper lesson behind investment-linked and whole-life policies is a general one: combining protection and investing in a single product almost always costs more than buying the parts separately.
Margin of Safety: The Right Tool for Each Outcome
Insurance is one expression of a deeper idea — leaving room for error. But no single tool covers every outcome. A sound plan layers insurance, cash, bonds and equities, each handling a different part of an unpredictable future.
Why Smart People Buy Bad Insurance
The mistakes people make with insurance are remarkably consistent — and they trace back to how the human mind handles risk. The work of Daniel Kahneman and Amos Tversky explains most of them.
Mental Accounting: Why We Treat Dollars Differently
A dollar is a dollar — but our minds refuse to believe it. Nobel laureate Richard Thaler showed that we sort money into mental "accounts" by where it came from, and spend a bonus or a windfall far more loosely than salary. Knowing the bias lets you use it on purpose.
The Latte Factor — and Its Critics
David Bach's "latte factor" says small daily indulgences, invested instead, add up to a fortune. It is a useful nudge about habits — but its critics are right that obsessing over coffee distracts from the big rocks: housing, transport, and the costs that truly move the needle.
Lifestyle Creep and Parkinson's Law
As income rises, spending quietly rises to meet it — a pay rise becomes a nicer car, a bigger flat, pricier habits, and the savings rate never improves. This is lifestyle creep, and the antidote is to intercept each raise before it is absorbed.
Wealth Is What You Don't See
Morgan Housel draws a sharp line between being rich and being wealthy. Rich is the income you spend on visible things; wealth is the money you don't spend. The big house and the new car are evidence of money leaving — not of wealth staying.
Knowing When You Have Enough
If your definition of "enough" rises every time your income does, you will never feel you have arrived — no matter how much you earn. Morgan Housel argues that the most valuable financial skill is the hardest: knowing when to stop moving the goalposts.
Hedonic Adaptation: Spending Well, Not Just More
We adapt to almost anything we buy. The thrill of a new purchase fades back to baseline surprisingly fast — a phenomenon psychologists call hedonic adaptation. Understanding it changes how you spend: toward the few things that keep paying back, and away from the many that don't.
Make Your Money Work for You
Robert Kiyosaki's central lesson is that the wealthy do not work for money — they make money work for them. The bridge between the two is a budget that produces a surplus, and the discipline to turn that surplus into income-producing assets rather than more spending.
Rules Beat Forecasts
Endowments do not beat the market by predicting it. They write down a sensible policy — a target mix, a rebalancing schedule, a spending rule — and follow it when conditions are not calm. The costly retirement mistakes are behavioural, and a one-page policy is the antidote.