The author urges readers to plan for the future by holding long-term diversified stock portfolios and allowing them to compound, saving for the future, and operating with a margin for error.
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Similar ideas to 9. Room for Error:
The most important part of every plan is planning on your plan, not going according to plan.
Have room for error when estimating your future returns. For his own investments, Housel assumes the future returns he’ll earn in his lifetime will be ⅓ lower than the historic aver...
Decide for how long you want to invest to best evaluate your portfolio for the future.
A short term investment portfolio will likely be riskier than long term retirement portfolios.
It’s usually viewed as a conservative hedge, used by those who don’t want to take much risk. But when used appropriately it’s the opposite. Room for error lets you stick around long enough to let the odds of benefiting from a low-probability outcome fall in your favor.
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