Comment by astrange
8 hours ago
This kind of marginal risk thinking has never made sense to me because of the declining marginal value of money.
If you have $0 you can't accept any risk and can't make any decisions correctly. But if you have like $4 million you also have no reason to make any decisions correctly because risk no longer matters to you. So it relies on them having expensive tastes such that they can't just retire?
It has to do with the lindy effect. If you have $X, statistically you will quit trying to accumulate money when you have $2X. Hence you are safe to entrust some reasonable fraction of $X in without fear of you running away with it. Someone with substantially less than $X will see that as the most money they will ever see in their lifetime and immediately being trying to cash out.