There's a second component of a good savings plan, which is something that a colleague of mine called Schlomo Benartzi and I developed many years ago, that we call "save more tomorrow."
Richard Thalerhe card companies will often, as a courtesy, honor that credit card, but hit you with a penalty. And you keep swiping your card for $3 at Starbucks for your lattรฉ, and you're getting hit with a $25 penalty because it's over your credit limit.
Richard ThalerSo the world is much more correlated than we give credit to. And so we see more of what Nassim Taleb calls "black swan events" - rare events happen more often than they should because the world is more correlated.
Richard ThalerInvestors must keep in mind that there's a difference between a good company and a good stock. After all, you can buy a good car but pay too much for it.
Richard Thaler