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The concepts from "The Psychology of Money" can be applied in real-world investment scenarios in several ways. Firstly, investors should always account for the reality of risk in their investments. This means not betting everything on a single strategy and maintaining a reserve in case investments go wrong. Secondly, investors should be aware that the returns they expect may not materialize, and loss will always come eventually. The key is to ensure that when loss happens, it is not catastrophic. Lastly, investors should understand that freak events happen all the time, and it's essential to build a margin for error into every plan and strategy.
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Freak events happen all the time. Things that have never happened before happen all the time. Even when someone thinks that they have planned for every possibility, they haven't. That's why it's so essential that margin for error is built into every plan and strategy. Investors always need to account for the ever-present reality of risk in their investments. They should never bet everything on a single strategy. They should always maintain a reserve in case their investments go wrong. They should always be aware that the returns they expect may never materialize. Loss will always come eventually, risk will always appear. The job of a competent investor is to make sure that when that happens, it is not catastrophic.
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How should investors manage the inevitabilities of risk? What are the most powerful wealth-building tools that require little technical skill? How do...
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