A: What would you do if I give you 20.000 dollar now, in addition, 4 choices: (A) put the money in the bank (B) invest the money (C) use it to make necessary improvements, such as renovating your moldy kitchen or replacing old tires (D) Treat yourself to a luxury cruise (E) join in a form of gambling, such as casino?
B: Most likely I will choose option A. I know an effect, that is the House - Money effect, it means, we treat the money that we win, discover or inherit much more frivolously than hard-earned cash. For this reason, many lottery winners end up worse off after they've cashed in their winnings. In the case you give, maybe, if I am a normal person man, I'm going to choose D or E. Now, I have known the effect, what should I do? If I consider this 20.000 dollar is earned by my hardship, no way I would choose D or E, I don't choose B since I have no specific plan, also I rarely think about investing. I am satisfied with the present life, so I don't choose C. Despite value for money may decrease, so even if I leave money sitting in the bank, I'm not sure I will have any more money, but this is the safest way. I will leave it in the bank, then consider using this money to do something useful, I will use it gradually. Perhaps, this is the most sensible way I can think of now