Investing 3: Smooth Spending & The 401K
Planet Money Summer School
Consumption Smoothing in a Short Term Setting
The concept of consumption smoothing is relevant to how we think about investing, not just for the short term. It works in both ways: you may need to save now so youan consume later. But it's also about risk and uncertainty, which is, well, i don't know if i'm going to have kids, or if i'm not going to be able to work at some point in the future. There might end a being times that would actually require me to have savings.
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