behaviour
A plan you can hold
The rule
A calm plan you can hold through a crash beats a perfect plan you quit in fear.
Where it flips
Comfort can become an excuse for a lazy, too-safe plan. Where it misleads: you play it so safe you barely grow. The fix: pick the strongest plan you can still hold through a bad year, not just the easiest one.
The best plan on paper is worthless if fear makes you quit at the worst moment. A calm, sensible plan that you can hold is far stronger than a perfect one you drop. You need to stay in the game long enough for your money to grow on itself, year after year. Staying put is the whole trick.
A worked example
One investor picks the perfect all-shares plan, then panics and quits in the first crash. Another picks a calmer mix she can hold through the storm, and stays invested. The calmer plan wins, because it survived. [illustrative]
How to spot it
- ·a plan that looks perfect but ignores how you feel in a crash
- ·past plans you dropped in the middle of a panic
- ·chasing higher returns over a plan you can stick with
Morgan Housel · The Psychology of Money