I love discovering delusions about the psychology of money, so here’s a question for you:
What are areas where people THINK they’re making a lot of money, but actually don’t?
- Buying a house (people hate hearing this)
- Day trading and picking individual stocks (see chapter 6 of my personal finance book for an entire expose on how fancy fund managers fail to beat the market…and how you will fail at picking stocks, too)
- Investing in hedge funds (most fail to beat the market)
- Venture capital (only top-tier funds beat the market; the rest underperform it…but everyone thinks they’re top-tier)
What else? Where do people think they’re making a lot of money, but they actually don’t?
Add a comment below and let’s watch the delusions roll in.