Time horizon
Risk & psychologyHow long money can stay invested before it is needed.
In plain terms
It determines the sensible equity share and almost nothing else does. Twenty years is still a long horizon.
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Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
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Bucket strategy
Risk & psychologySplitting a corpus by time horizon so near-term spending never depends on volatile assets.
In plain terms
Two years of spending in cash, the next few in debt, the rest in equity. You are never a forced seller.
Stress response
Risk & psychologyThe physiological reaction to acute stress, which narrows attention, strengthens loss aversion and shortens the felt time horizon.
In plain terms
The horizon that was ten years becomes ten days. It is why stopping for the day after a significant loss is protection rather than punishment.