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Episode 3161:
Chris Reining unpacks the psychological and strategic considerations behind investing a large lump sum, emphasizing the risks of loss aversion and market timing. By advocating for a slower, more measured investment strategy aligned with your savings rate, he provides a practical framework to protect against emotional decision-making and reduce risk while still building long-term wealth.
Read along with the original article(s) here: https://chrisreining.com/how-should-i-invest-a-lump-sum/
Quotes to ponder:
"We like gains, but we hate losses even more."
"To protect you from yourself by easing smaller amounts of money into the market over longer periods of time it gives new investors more time to get comfortable with investing."
"By investing a static amount each month, you average everything out."
Episode references:
The Power of Loss Aversion - Daniel Kahneman and Amos Tversky: https://en.wikipedia.org/wiki/Loss_aversion
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