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03/06/2005: "Updated index for: Money illusion"

Time to put a ceiling on our money illusions
Stuart Fowler's January 2003 FT article looks at the high cost to investors of thinking and accounting in money terms instead of real terms, adjusted for inflation. Most personal investment goals involve real or 'constant purchasing power' targets and the risk utility functions that matter most are about real outcomes at the end of the journey, not just the path the journey takes.

Amongst the examples of money illusion in that FT article is the unrealistic expectations most people have about housing as an investment. This is also covered in the 'Property myths' index.