Having Financial Plans With Margins Of Error Is Essential

In a world governed by probabilities rather than certainties, there has to be a margin of error for planning

• In case things go wrong or unexpected events occur, having margin helps to last through the worst moments of a plan
  • When you lose 30% on an investment, you say abandon the strategy, even if it is correct, because of your mental limitations
• An optimistic approach to risk-taking is required
  • You have to take risks to make progress, this cannot be compensated for
  • But it is not worth taking a risk that can ruin you

One way to do this is by saving

• Saving for no reason is not a good idea
  • The motive arises suddenly in the future

LOK: 4. Management
RL: Psychology of money
IDEAS: Risk management Personal finance
#Antifragility