Last Updated on 23, March 2014
Most people will exaggerate earnings from investments due to the following reasons:
a) It is shameful to tell others you have lost a lot of money. Thus people will tend to exaggerate earnings when it is actually quite small
b) People tend to "write-off" past investment mistakes and pretend it never happen and so they don't tell people about their shameful past
c) Earnings are exaggerated because of failure to take into account of cost and time value for money. For example, those invest in properties tend to exaggerate their earnings because they fail to take into account i) cost of capital, maintenance cost, conservancy charges, transaction cost such as agents' fees and legal fees and time spent.
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