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The Psychology of Money
Doing well with money isn't necessarily about what you know. It's about how you behave. And behavior is hard to teach, even to really smart people. Money--investing, personal finance, and business decisions--is typically taught as a math-based field, where data and formulas tell us exactly what to do. But in the real world people don't make financial decisions on a spreadsheet. They make them at the dinner table, or in a meeting room, where personal history, your own unique view of the world, ego, pride, marketing, and odd incentives are scrambled together. In The Psychology of Money, award-winning author Morgan Housel shares 19 short stories exploring the strange ways people think about money and teaches you how to make better sense of one of life's most important topics.
252 pages, Paperback
First published January 1, 2020
About the author
Morgan Housel
26 books1,935 followersMorgan Housel is a partner at The Collaborative Fund. He is a two-time winner of the Best in Business Award from the Society of American Business Editors and Writers, winner of the New York Times Sidney Award, and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism. He lives in Seattle with his wife and two kids.
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Displaying 1 - 30 of 12,863 reviews
January 27, 2021
Pithy book. Here's some for you:
1. People act from their experiences. Don't judge from yours.
1. People act from their experiences. Don't judge from yours.
2. Luck & Risk is all around you. They don't fit the stories you want to tell.
3. If you can't recognize when you have enough, you will soon have nothing.
4. Warren Buffet could have been an ordinary investor if not for his longevity.
Investing - if done well - is utterly boring.
It’s because the chief ingredient in the growth of a portfolio is time.
5. More than big returns, be financially unbreakable. If you are unbreakable you actually will get the biggest returns, because will be able to stick around long enough for compounding to work wonders.
6. The tail wags the dog in Finance and Business.
Long tails—the farthest ends of a distribution of outcomes—have tremendous influence, where a small number of events can account for the majority of outcomes.
7. People want to become wealthier to make them happier. Happiness is a complicated subject because everyone’s different. But if there’s a common denominator in happiness—a universal fuel of joy—it’s that people want to control their lives.
It is the highest dividend money pays.
8. The Man in the Fancy Car is irrelevant, because the observers are busy imagining themselves in it.
9. There is no faster way to feel rich than to spend lots of money on really nice things. There's no faster way to not be rich as well. That's the paradox of wealth.
10. One of the most powerful ways to increase your savings isn’t to raise your income. It’s to raise your humility.
Dont spend money to show you have money.
Savings = Income - Ego
11. Adopt a reasonable strategy, not an ultra rational one. The plan that you are able to stick to is better than the one that looks good on a spreadsheet.
12. "Things that have never happened before happen all the time.”
History is mostly the study of surprising events. 2020 should have taught us this, of course.
13. Margin of Safety—you can also call it room for error—is the only effective way to safely navigate a world that is governed by odds, not certainties.
14. An underpinning of psychology is that people are poor forecasters of their future selves.
Imagining a goal is easy and fun. Imagining a goal in the context of the realistic life stresses that grow with competitive pursuits is something entirely different.
15. Don't think of market losses from fluctuations as a fine, but as an admission fee. It'll help you stay in longer.
16. The financial game has one fundamental parameter - the time horizon.
Never copy someone working with a different time horizon than you.
17. Optimism is the best bet for most people because the world tends to get better for most people most of the time.
Progress happens too slowly to notice, but setbacks happen too quickly to ignore.
Pessimism sounds smarter, but optimism is the long game.
18. Trying to make sense of the world is the cause of most mistakes.
Psychologist Philip Tetlock once wrote: “We need to believe we live in a predictable, controllable world, so we turn to authoritative-sounding people who promise to satisfy that need.”
Respect the mess.
March 12, 2022
This was a short but enjoyable read. The main point is that we are complicated creatures who have complicated relationships with money. It’s ok and expected to not base every decision off of cold Excel calculations. Instead of pretending we will, here is some of the advice he recommends:
Don’t try and time the market. Dollar cost average. 85% of large cap fund managers did not beat the S&P 500. Stock picking isn’t the worst thing ever but know the odds are not in your favor. Doing some of that is OK but you should primarily stick with low cost index funds.
Always keep an eye on greed creeping in. Make sure to avoid the psychological treadmill of keeping up with the Joneses.
Investing a lot when you’re younger is so important. The vast majority of Warren Buffett’s wealth is because of how early he started investing, more so than having a higher rate of return. compounding is a wonderful thing.
Wealth usually ends up being more about how much money you save rather than how much you earn from your job or the right investments.
Saving is the gap between your income and your ego.
Having money saved gives you flexibility in many facets of life and immeasurable peace of mind. It allows you to do what you want, when you want it.
It’s OK to do something that gives you peace of mind even if it’s not the best financial decision. For example, finishing student loan payments with a 4% interest-rate even though you could make more by reducing payments and investing some of that in the market.
Expect the unexpected when it comes to the stock market, and don’t pull out money during downturns. Have a 1/3 buffer. For example, if the US stock market usually returns 6.9% after inflation, prepare for 4.6%. You may retire in a bear market or the past may not repeat itself.
To the point of not trying to time the market: only 9% of tactical mutual funds, those that try to re-allocate stock versus bond percentage based on economic forecasts, ended up doing better than just leaving it in. Enduring downturns is the cost of compounding, and it’s well worth the price. Think of market volatility as a fee. You get what you pay for.
Remember that people, especially the media, tend to air on the side of pessimism even if things usually get better over time.
All things considered, I would recommend this book!
Don’t try and time the market. Dollar cost average. 85% of large cap fund managers did not beat the S&P 500. Stock picking isn’t the worst thing ever but know the odds are not in your favor. Doing some of that is OK but you should primarily stick with low cost index funds.
Always keep an eye on greed creeping in. Make sure to avoid the psychological treadmill of keeping up with the Joneses.
Investing a lot when you’re younger is so important. The vast majority of Warren Buffett’s wealth is because of how early he started investing, more so than having a higher rate of return. compounding is a wonderful thing.
Wealth usually ends up being more about how much money you save rather than how much you earn from your job or the right investments.
Saving is the gap between your income and your ego.
Having money saved gives you flexibility in many facets of life and immeasurable peace of mind. It allows you to do what you want, when you want it.
It’s OK to do something that gives you peace of mind even if it’s not the best financial decision. For example, finishing student loan payments with a 4% interest-rate even though you could make more by reducing payments and investing some of that in the market.
Expect the unexpected when it comes to the stock market, and don’t pull out money during downturns. Have a 1/3 buffer. For example, if the US stock market usually returns 6.9% after inflation, prepare for 4.6%. You may retire in a bear market or the past may not repeat itself.
To the point of not trying to time the market: only 9% of tactical mutual funds, those that try to re-allocate stock versus bond percentage based on economic forecasts, ended up doing better than just leaving it in. Enduring downturns is the cost of compounding, and it’s well worth the price. Think of market volatility as a fee. You get what you pay for.
Remember that people, especially the media, tend to air on the side of pessimism even if things usually get better over time.
All things considered, I would recommend this book!
April 24, 2024
The blog post that turned into a book
http://www.collaborativefund.com/blog...
Teh Hooi Ling’s review
https://www.businesstimes.com.sg/weal...
CFA webinar
https://annual.cfainstitute.org/speak...
https://blogs.cfainstitute.org/invest...
The hardest financial skill is getting the goalpost to stop moving.
Lesson from Rajat Gupta of McK.
https://www.ft.com/content/bb5fb31c-4...
Freedom with your own time is the highest dividend money pays. The ability to do whatever you desire with your time. The ability to do WHAT you want, WHEN you want, with WHO you want, for as long as you want is priceless. That’s what having money is good for. Money is a concentrated form of energy.
https://podcasts.apple.com/sg/podcast...
Biggest cause of financial ruin is spending beyond your means.
The quicksand of overspending https://www.straitstimes.com/business...
Simple (but not easy) prescription for financial independence: mindset of frugality + independence (don’t bother keeping up w/ the Joneses, prize freedom & independence, appreciate the free things in life: reading, long walks in the park, podcasts, YouTube, time at the beach etc) => save prodigiously & invest savings for uninterrupted long-term compounding through regular dollar cost averaging in diversified low cost index funds (eg Vanguard S&P, international & China funds) as the core of one’s portfolio. Asset allocation: own house (to hedge inflation), [20%] cash (avoid mkt timing but may vary from defensive to aggressive depending on where we are in the mkt cycle), balance [80%] in low cost diversified index funds (US & international incl. China) that’s the core, explore with stock picking in great businesses run by great mgmt (compounders) if you’re so inclined towards stock picking but be realistic & realise that the odds of beating the mkts are slim.
How to be frugal
https://www.asiaone.com/lifestyle/sav...
Inner vs outer scorecard: sailing around the world w/ Moitessier vs Crowhurst
http://www.collaborativefund.com/blog...
Trung Phan's 8 takeaways:
1/ For financial success, psychology is more important than smarts (Ronald James the janitor vs Richard Fuscone the investment banker)
2/ Ultimate prize = controlling your time
3/ Being rich vs. being wealthy
4/ Volatility is the price you pay for higher returns
5/ Buffett's skill is investing, but his secret is time
6/ The best financial heuristic = "can I sleep at night"
7/ You only need a *few big wins* to succeed
8/ It's crucial to define your investing goals
https://twitter.com/TrungTPhan/status...
Dopamine hunt 31 Jan 2023
https://collabfund.com/blog/everythin...
http://www.collaborativefund.com/blog...
Teh Hooi Ling’s review
https://www.businesstimes.com.sg/weal...
CFA webinar
https://annual.cfainstitute.org/speak...
https://blogs.cfainstitute.org/invest...
The hardest financial skill is getting the goalpost to stop moving.
Lesson from Rajat Gupta of McK.
https://www.ft.com/content/bb5fb31c-4...
Freedom with your own time is the highest dividend money pays. The ability to do whatever you desire with your time. The ability to do WHAT you want, WHEN you want, with WHO you want, for as long as you want is priceless. That’s what having money is good for. Money is a concentrated form of energy.
https://podcasts.apple.com/sg/podcast...
Biggest cause of financial ruin is spending beyond your means.
The quicksand of overspending https://www.straitstimes.com/business...
Simple (but not easy) prescription for financial independence: mindset of frugality + independence (don’t bother keeping up w/ the Joneses, prize freedom & independence, appreciate the free things in life: reading, long walks in the park, podcasts, YouTube, time at the beach etc) => save prodigiously & invest savings for uninterrupted long-term compounding through regular dollar cost averaging in diversified low cost index funds (eg Vanguard S&P, international & China funds) as the core of one’s portfolio. Asset allocation: own house (to hedge inflation), [20%] cash (avoid mkt timing but may vary from defensive to aggressive depending on where we are in the mkt cycle), balance [80%] in low cost diversified index funds (US & international incl. China) that’s the core, explore with stock picking in great businesses run by great mgmt (compounders) if you’re so inclined towards stock picking but be realistic & realise that the odds of beating the mkts are slim.
How to be frugal
https://www.asiaone.com/lifestyle/sav...
Inner vs outer scorecard: sailing around the world w/ Moitessier vs Crowhurst
http://www.collaborativefund.com/blog...
Trung Phan's 8 takeaways:
1/ For financial success, psychology is more important than smarts (Ronald James the janitor vs Richard Fuscone the investment banker)
2/ Ultimate prize = controlling your time
3/ Being rich vs. being wealthy
4/ Volatility is the price you pay for higher returns
5/ Buffett's skill is investing, but his secret is time
6/ The best financial heuristic = "can I sleep at night"
7/ You only need a *few big wins* to succeed
8/ It's crucial to define your investing goals
https://twitter.com/TrungTPhan/status...
Dopamine hunt 31 Jan 2023
https://collabfund.com/blog/everythin...
December 17, 2020
I, hereby, list down 43 fabulous financial lessons from this awesome book.
1/ Ordinary folks with no financial education can be wealthy if they have a handful of behavioral skills that have nothing to do with formal measures of intelligence.
2/ Financial success, to an extent, is driven by luck irrespective of intelligence and effort
3/ Financial success is not hard science, unlike engineering or doctorate or any other profession. It is a soft skill, where how you behave is far more important than what you know. Knowledge is good but knowing what to do has nothing to do with what goes in your mind before you try to do it.
4/ All subjects are governed by defined rules - be it physics, chemistry, mathematics, or any other. Finance, however, is driven by emotions and the psychology and behavior of people.
5/ Studying the history of money makes you feel that you understand something pretty well. Once you understand you assume that you will behave according to the understanding. That's not life at all. We have a lot of knowledge but we hardly implement it in our lives. Until we have lived through those historical experiences and experienced the scars, the triumphs, the emotions, we may not understand it enough to change our behavior.
6/ Luck and Risk are both the reality that every outcome in life is guided by forces other than individual effort. They are doppelgangers. When you are in the stock market, you are one person in a game with 7 billion players and infinite moving parts.
7/ Someone else's failure is usually attributed to bad decisions, and our own failure is usually attributed to bad luck. Not all success is due to hard work and not all failures are due to laziness. Keep this in mind when judging anyone, including yourself.
8/ People who have control over their time tend to be happier in life.
9/ The hardest financial skill, and one of the most important ones, is to get the goalpost to stop moving. It gets dangerous when the taste of having more - money, power, or prestige - increases ambition faster than satisfaction. One step forward pushes the goalpost two steps ahead, and the vicious circle starts. You always feel you are falling behind in spite of achieving so much.
10/ There are certain things which are never worth taking a risk, and they define your 'enough of money' in life e.g. Character, Family and friends, freedom, being loved, happiness - to name a few. If you need or rather, greed for money makes you compromise on these, you got to re-think and define your money boundaries. A clear financial freedom plan helps you define your boundaries.
11/ Warren Buffett is a great investor, but his wealth is not just because of being a great investor. There are far better investors than him. His wealth, apart from being a great investor, is driven by the number of years for which he has been investing now - 75 years. His skill is investing but his secret is time. Of his USD 84.5 billion net worth, USD 84.2 billion was accumulated after the age of 50 ie after investing for 40+ years. That is the maximum period for which most of us would invest, and therefore we stand little chance to make it that big, unless we start pretty early in life.
12/ Good investing is not about getting very high returns. That's not replicable over many years. Good investing is about getting decent enough returns over decades. That's when compounding turns wild.
13/ Getting money, and being able to keep that money are two vastly different skills. Getting money requires action, taking risks, being positive. Keeping money requires just the opposite skills - playing safe, being fearful, and a lot of inaction.
14/ As in the case of airline pilots, investing is all about hours and hours of cruise control punctuated by moments of sheer madness. An investing genius will do ordinary things when everyone around is going crazy.
15/ Tails drive everything in finance. It's normal for a lot of things to go wrong a lot of times. No one makes good decisions all the time. Buffet has owned 400-500 stocks in his lifetime and made most of his money in at most 10 stocks. Rest was just average.
16/ We will all go right as well as wrong in our decisions. But how much money we make when we are right, and how less we lose when we are wrong - will decide our future wealth.
17/ The freedom to do what you want, when you want, with whom you want, for as long as yo want, is true freedom. This is the highest form of dividend that your money can pay you. Money's greatest intrinsic value is its ability to get you control over your time.
18/ Doing something you love on a schedule you don't want, is equivalent to doing something you hate.
19/ We, as humans, in spite of all the technological advancements have lost control over our personal time, and loss of this control is the key to unhappy lives today
[Recommended Read: Happiness Unlimited]
20/ No one is impressed with your possessions as much as you are.
21/ You might think you want a big house, a fancy car, and an expensive watch. But this is not the inner truth. The fact is that you want respect and admiration. You might think that the expensive stuff may help you get respect and admiration, but it rarely does, especially from the people you want to admire or respect you.
22/ Wealth is what you do not see. House, cars, vacations, etc is not wealth. Assets, investments that have not yet been converted into houses, cars, and vacations define your wealth.
23/ Rich is the current income. Wealth is income not spent. Wealth is hard because it requires self-control.
24/ The world is full of people who look modest but are really wealthy, and also those who look rich but are almost insolvent.
25/ Building wealth has little to do with your income or investment returns but a lot to do with your savings rate. There is a lot of uncertainty and risk in the first two. 3rd is the only factor that you control. You can build wealth without a high income, but there is no way you can build wealth without a high savings rate.
26/ Being rational and technically correct may not be enough to stick in the game. It is more important to be reasonable to yourself. Being reasonable allows you to stay in the game longer, and the longer you stay, the more wealth you create.
27/ History rarely tells you anything about the future of investments, because unlike the planet for astroscientists, or the human body for doctors, investors are indeed emotional.
28/ Past surprises cannot be used as a guide to define future boundaries. Use past surprises as an admission of the fact that we have no idea what might happen next.
29/ Risk comes from the unknown. There will always be unprecedented events, for which we will never be prepared, and therefore, will have a massive impact on how the world operates.
30/ Since economies evolve, recent history is often the best guide to the future because it is more likely to factor in conditions that are still relevant today. The farther back you go in history, the more general your takeaways would be e.g. human emotions haven't changed much over the last 100 years.
31/ The best way to achieve felicity is to aim low.
32/ People are poor forecasters of their future self. Only 27% of college graduates have a job related to their major subject. Plans will change because we change. Hence, your plan has to be adaptable to changes as you move along creating wealth.
33/ The price that you pay for good investment returns is to withstand the market volatility. It is definitely not an easy price to pay. Not everyone will be able to pay for it. Most people who try to go in and come out and try to time the market is trying to get good returns without paying the price - something that never works.
34/ Bubble formation is not so much about people irrationally participating in long term investing. It's about people rationally moving towards short-term trading to capture the momentum that is self-feeding. Short term trading is rational, natural, and expected. But long term investors cannot afford to be driven with that.
35/ Spend enough time identifying your game and stick to it. And realize that different players are playing different games with a different set of rules. A lot of money is lost in trying to copy the actions of other players, resulting in financial disasters.
36/ Extremely good and extremely bad circumstances rarely remain that way for long because supply and demand adapt in hard to predict ways.
37/ Growth is driven by compounding, which can take decades, and therefore, hardly gets to be noticed. Destruction is driven by single points of failure or loss of confidence, which happens almost instantly, and grabs instant attention.
38/ We know a lot less about how the world works than what we think we do.
39/ History cannot be interpreted without applying our selection process, which happens to be an art. This indicates that the same history can teach different things to different people. The ability to explain the past gives us the illusion that the world is understandable. That's enough to do blunders in personal finance.
40/ We all want the complex world we live in to make sense, and therefore we create stories to fill in the things that we do not understand.
41/ Risk is what is left over when you think that you have thought through everything. Any predictions are illusionary.
42/ Good decisions are not always rational. At some point in time, you got to choose between being happy or being right.
43/ My investing strategy doesn't rely on picking the right sector or timing the next recession. It relies on a high savings rate, patience, and optimism that the economy would generally do well in the decades to come.
Hope these 43 fabulous financial lessons will help shape up your thought process to some extent and help you manage your money better.
1/ Ordinary folks with no financial education can be wealthy if they have a handful of behavioral skills that have nothing to do with formal measures of intelligence.
2/ Financial success, to an extent, is driven by luck irrespective of intelligence and effort
3/ Financial success is not hard science, unlike engineering or doctorate or any other profession. It is a soft skill, where how you behave is far more important than what you know. Knowledge is good but knowing what to do has nothing to do with what goes in your mind before you try to do it.
4/ All subjects are governed by defined rules - be it physics, chemistry, mathematics, or any other. Finance, however, is driven by emotions and the psychology and behavior of people.
5/ Studying the history of money makes you feel that you understand something pretty well. Once you understand you assume that you will behave according to the understanding. That's not life at all. We have a lot of knowledge but we hardly implement it in our lives. Until we have lived through those historical experiences and experienced the scars, the triumphs, the emotions, we may not understand it enough to change our behavior.
6/ Luck and Risk are both the reality that every outcome in life is guided by forces other than individual effort. They are doppelgangers. When you are in the stock market, you are one person in a game with 7 billion players and infinite moving parts.
7/ Someone else's failure is usually attributed to bad decisions, and our own failure is usually attributed to bad luck. Not all success is due to hard work and not all failures are due to laziness. Keep this in mind when judging anyone, including yourself.
8/ People who have control over their time tend to be happier in life.
9/ The hardest financial skill, and one of the most important ones, is to get the goalpost to stop moving. It gets dangerous when the taste of having more - money, power, or prestige - increases ambition faster than satisfaction. One step forward pushes the goalpost two steps ahead, and the vicious circle starts. You always feel you are falling behind in spite of achieving so much.
10/ There are certain things which are never worth taking a risk, and they define your 'enough of money' in life e.g. Character, Family and friends, freedom, being loved, happiness - to name a few. If you need or rather, greed for money makes you compromise on these, you got to re-think and define your money boundaries. A clear financial freedom plan helps you define your boundaries.
11/ Warren Buffett is a great investor, but his wealth is not just because of being a great investor. There are far better investors than him. His wealth, apart from being a great investor, is driven by the number of years for which he has been investing now - 75 years. His skill is investing but his secret is time. Of his USD 84.5 billion net worth, USD 84.2 billion was accumulated after the age of 50 ie after investing for 40+ years. That is the maximum period for which most of us would invest, and therefore we stand little chance to make it that big, unless we start pretty early in life.
12/ Good investing is not about getting very high returns. That's not replicable over many years. Good investing is about getting decent enough returns over decades. That's when compounding turns wild.
13/ Getting money, and being able to keep that money are two vastly different skills. Getting money requires action, taking risks, being positive. Keeping money requires just the opposite skills - playing safe, being fearful, and a lot of inaction.
14/ As in the case of airline pilots, investing is all about hours and hours of cruise control punctuated by moments of sheer madness. An investing genius will do ordinary things when everyone around is going crazy.
15/ Tails drive everything in finance. It's normal for a lot of things to go wrong a lot of times. No one makes good decisions all the time. Buffet has owned 400-500 stocks in his lifetime and made most of his money in at most 10 stocks. Rest was just average.
16/ We will all go right as well as wrong in our decisions. But how much money we make when we are right, and how less we lose when we are wrong - will decide our future wealth.
17/ The freedom to do what you want, when you want, with whom you want, for as long as yo want, is true freedom. This is the highest form of dividend that your money can pay you. Money's greatest intrinsic value is its ability to get you control over your time.
18/ Doing something you love on a schedule you don't want, is equivalent to doing something you hate.
19/ We, as humans, in spite of all the technological advancements have lost control over our personal time, and loss of this control is the key to unhappy lives today
[Recommended Read: Happiness Unlimited]
20/ No one is impressed with your possessions as much as you are.
21/ You might think you want a big house, a fancy car, and an expensive watch. But this is not the inner truth. The fact is that you want respect and admiration. You might think that the expensive stuff may help you get respect and admiration, but it rarely does, especially from the people you want to admire or respect you.
22/ Wealth is what you do not see. House, cars, vacations, etc is not wealth. Assets, investments that have not yet been converted into houses, cars, and vacations define your wealth.
23/ Rich is the current income. Wealth is income not spent. Wealth is hard because it requires self-control.
24/ The world is full of people who look modest but are really wealthy, and also those who look rich but are almost insolvent.
25/ Building wealth has little to do with your income or investment returns but a lot to do with your savings rate. There is a lot of uncertainty and risk in the first two. 3rd is the only factor that you control. You can build wealth without a high income, but there is no way you can build wealth without a high savings rate.
26/ Being rational and technically correct may not be enough to stick in the game. It is more important to be reasonable to yourself. Being reasonable allows you to stay in the game longer, and the longer you stay, the more wealth you create.
27/ History rarely tells you anything about the future of investments, because unlike the planet for astroscientists, or the human body for doctors, investors are indeed emotional.
28/ Past surprises cannot be used as a guide to define future boundaries. Use past surprises as an admission of the fact that we have no idea what might happen next.
29/ Risk comes from the unknown. There will always be unprecedented events, for which we will never be prepared, and therefore, will have a massive impact on how the world operates.
30/ Since economies evolve, recent history is often the best guide to the future because it is more likely to factor in conditions that are still relevant today. The farther back you go in history, the more general your takeaways would be e.g. human emotions haven't changed much over the last 100 years.
31/ The best way to achieve felicity is to aim low.
32/ People are poor forecasters of their future self. Only 27% of college graduates have a job related to their major subject. Plans will change because we change. Hence, your plan has to be adaptable to changes as you move along creating wealth.
33/ The price that you pay for good investment returns is to withstand the market volatility. It is definitely not an easy price to pay. Not everyone will be able to pay for it. Most people who try to go in and come out and try to time the market is trying to get good returns without paying the price - something that never works.
34/ Bubble formation is not so much about people irrationally participating in long term investing. It's about people rationally moving towards short-term trading to capture the momentum that is self-feeding. Short term trading is rational, natural, and expected. But long term investors cannot afford to be driven with that.
35/ Spend enough time identifying your game and stick to it. And realize that different players are playing different games with a different set of rules. A lot of money is lost in trying to copy the actions of other players, resulting in financial disasters.
36/ Extremely good and extremely bad circumstances rarely remain that way for long because supply and demand adapt in hard to predict ways.
37/ Growth is driven by compounding, which can take decades, and therefore, hardly gets to be noticed. Destruction is driven by single points of failure or loss of confidence, which happens almost instantly, and grabs instant attention.
38/ We know a lot less about how the world works than what we think we do.
39/ History cannot be interpreted without applying our selection process, which happens to be an art. This indicates that the same history can teach different things to different people. The ability to explain the past gives us the illusion that the world is understandable. That's enough to do blunders in personal finance.
40/ We all want the complex world we live in to make sense, and therefore we create stories to fill in the things that we do not understand.
41/ Risk is what is left over when you think that you have thought through everything. Any predictions are illusionary.
42/ Good decisions are not always rational. At some point in time, you got to choose between being happy or being right.
43/ My investing strategy doesn't rely on picking the right sector or timing the next recession. It relies on a high savings rate, patience, and optimism that the economy would generally do well in the decades to come.
Hope these 43 fabulous financial lessons will help shape up your thought process to some extent and help you manage your money better.
April 11, 2024
In this book readers are treated to invaluable insights into the intricate relationship between wealth, greed, and happiness.
Through a combination of engaging anecdotes and well-researched principles, Housel delves into the psychological aspects of money management. The audiobook edition, available here: The Psychology of Money , enhances the experience with its immersive narration, making complex concepts easily accessible to listeners.
One of the book's greatest strengths lies in its ability to challenge conventional wisdom and offer fresh perspectives on wealth accumulation and personal finance. Housel emphasizes the importance of understanding human behavior and emotions when making financial decisions, providing readers with practical wisdom they can apply to their own lives.
More than just a guide to financial success, this book serves as a reminder that true wealth extends beyond monetary value. Housel encourages readers to prioritize happiness and fulfillment over material possessions, offering valuable lessons that resonate long after the final chapter.
For anyone seeking a deeper understanding of their relationship with money and a roadmap to financial well-being, this book is an indispensable read. It's a book that not only enriches the mind but also nourishes the soul, leaving a lasting impact on those who embark on its insightful journey.
Through a combination of engaging anecdotes and well-researched principles, Housel delves into the psychological aspects of money management. The audiobook edition, available here: The Psychology of Money , enhances the experience with its immersive narration, making complex concepts easily accessible to listeners.
One of the book's greatest strengths lies in its ability to challenge conventional wisdom and offer fresh perspectives on wealth accumulation and personal finance. Housel emphasizes the importance of understanding human behavior and emotions when making financial decisions, providing readers with practical wisdom they can apply to their own lives.
More than just a guide to financial success, this book serves as a reminder that true wealth extends beyond monetary value. Housel encourages readers to prioritize happiness and fulfillment over material possessions, offering valuable lessons that resonate long after the final chapter.
For anyone seeking a deeper understanding of their relationship with money and a roadmap to financial well-being, this book is an indispensable read. It's a book that not only enriches the mind but also nourishes the soul, leaving a lasting impact on those who embark on its insightful journey.
November 25, 2023
I have been seeing this book on my Goodreads feeds almost every day since it was published.
Nearly all of my friends have rated it 4 or 5 stars. My expectations were high when I decided to read this book.
I have all three formats of this book with me. I decided to go for the audiobook version. I heard this whole book last weekend when I went for a long solo drive.
When the first chapter was over, I was hugely disappointed. My expectations were high, and I was expecting something extraordinary. Instead, the author simply said the basics of investing and the stock market in the initial chapter. Still, I decided to continue hearing it as I was not ready to discard it after just one chapter.
I slowly started liking it and found out that the author is not trying to tell anything extraordinary in this book but trying to make us clearly understand some simple things and make our basics correct. I finished hearing this book during my drive itself. When I returned home, I took the physical copy of this book and started rereading it. I simply loved the audiobook experience, and I wanted to go through the concepts discussed by the author once again as I thought it would benefit me in one way or the other. This will be a great choice if you are interested in reading a book discussing about wealth.
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You can also follow me on
Instagram ID - Dasfill | YouTube Channel ID - Dasfill | YouTube Health Channel ID - Dasfill - Health | YouTube Malayalam Channel ID - Dasfill - Malayalam | Threads ID - Dasfill | X ID - Dasfill1 | Snapchat ID - Dasfill | Facebook ID - Dasfill | TikTok ID - Dasfill1
Nearly all of my friends have rated it 4 or 5 stars. My expectations were high when I decided to read this book.
I have all three formats of this book with me. I decided to go for the audiobook version. I heard this whole book last weekend when I went for a long solo drive.
When the first chapter was over, I was hugely disappointed. My expectations were high, and I was expecting something extraordinary. Instead, the author simply said the basics of investing and the stock market in the initial chapter. Still, I decided to continue hearing it as I was not ready to discard it after just one chapter.
I slowly started liking it and found out that the author is not trying to tell anything extraordinary in this book but trying to make us clearly understand some simple things and make our basics correct. I finished hearing this book during my drive itself. When I returned home, I took the physical copy of this book and started rereading it. I simply loved the audiobook experience, and I wanted to go through the concepts discussed by the author once again as I thought it would benefit me in one way or the other. This will be a great choice if you are interested in reading a book discussing about wealth.
—————————————————————————
You can also follow me on
Instagram ID - Dasfill | YouTube Channel ID - Dasfill | YouTube Health Channel ID - Dasfill - Health | YouTube Malayalam Channel ID - Dasfill - Malayalam | Threads ID - Dasfill | X ID - Dasfill1 | Snapchat ID - Dasfill | Facebook ID - Dasfill | TikTok ID - Dasfill1
December 16, 2020
2020 is one of those years where I took my personal finance management seriously not only because I turned 30 but I also became very aware of all the financial options available for investment and the great necessity for a woman, especially a married one, to be financially literate and independent.
The Psychology of Money is one of the those books that lays the fundamentals required for investment and saving your money without pushing and punishing with a lot of jargons, technical terms, and read-the-offer-documents-carefully-before-investing kind of mundane warnings (mind you, I am academically qualified and work in Finance and a Legal field). The book speaks in a very clear manner, chapters being crisp and brief, in a language which is assertive with a lot of understanding of the psychology of an individual average investor/human who wants to secure the future.
This book helped me to understand, something I never really did till now, that saving/investing money is a habit which is greatly guided by the relationship which one establishes with money itself. Do you see money as a tool/ enabler to pursue goals which brings you happiness or do you see money itself as happiness? Do you want to earn money because you want to buy 'things' (tangible, and as a show) or do you want to earn money because you want to secure a future that is stable, well-grounded, good-enough to weather through all the rough corners of life? Do you want to be rich or wealthy?. It's these fundamental questions which will guide in forming solid habits towards savings and investments.
The chapter explaining why money should be saved although there's no visible goal gave me words for thoughts I never could articulate otherwise. Money has to be saved not because one aims to buy a house or achieve a dream but rather it helps to buy one of the most valuable of all things - TIME. Also, the chapter on how debt erodes wealth gives a clear picture on the actual (opportunity) cost of debt, which for an individual investor, is too huge and substantially toxic in the long term (NOTE: This book does not talk about the educational debt and has not much to offer on the same. All the debts mentioned are those incurred for purchasing an asset/developing an asset/maintaining a lifestyle).
Although the chapters on compounding are too known to me, as someone from Finance field, to read the same in a clear language is such a pleasure in itself. I loved the insistence on being 'reasonable' in one's investments and expectations of returns rather than being completely 'rational'. Nothing helps to act as a motivation to save ourselves from the spiral of consumerism than the simple sentence, "If you buy too many things from your money, all you have is too many things and no money."
Although almost all the examples in this book is about a guy, and it really made me feel bad that there isn't a name of a woman in the list of best investors around the world, it did help me to understand that the true value of money is not in its value of amassing assets but rather in its purchasing power to leverage oneself in life - in terms of freedom, independence, security, and ability to achieve dream, which one doesn't have to let go.
Definitely a book I will get back to read every year - again and again!
The Psychology of Money is one of the those books that lays the fundamentals required for investment and saving your money without pushing and punishing with a lot of jargons, technical terms, and read-the-offer-documents-carefully-before-investing kind of mundane warnings (mind you, I am academically qualified and work in Finance and a Legal field). The book speaks in a very clear manner, chapters being crisp and brief, in a language which is assertive with a lot of understanding of the psychology of an individual average investor/human who wants to secure the future.
This book helped me to understand, something I never really did till now, that saving/investing money is a habit which is greatly guided by the relationship which one establishes with money itself. Do you see money as a tool/ enabler to pursue goals which brings you happiness or do you see money itself as happiness? Do you want to earn money because you want to buy 'things' (tangible, and as a show) or do you want to earn money because you want to secure a future that is stable, well-grounded, good-enough to weather through all the rough corners of life? Do you want to be rich or wealthy?. It's these fundamental questions which will guide in forming solid habits towards savings and investments.
The chapter explaining why money should be saved although there's no visible goal gave me words for thoughts I never could articulate otherwise. Money has to be saved not because one aims to buy a house or achieve a dream but rather it helps to buy one of the most valuable of all things - TIME. Also, the chapter on how debt erodes wealth gives a clear picture on the actual (opportunity) cost of debt, which for an individual investor, is too huge and substantially toxic in the long term (NOTE: This book does not talk about the educational debt and has not much to offer on the same. All the debts mentioned are those incurred for purchasing an asset/developing an asset/maintaining a lifestyle).
Although the chapters on compounding are too known to me, as someone from Finance field, to read the same in a clear language is such a pleasure in itself. I loved the insistence on being 'reasonable' in one's investments and expectations of returns rather than being completely 'rational'. Nothing helps to act as a motivation to save ourselves from the spiral of consumerism than the simple sentence, "If you buy too many things from your money, all you have is too many things and no money."
Although almost all the examples in this book is about a guy, and it really made me feel bad that there isn't a name of a woman in the list of best investors around the world, it did help me to understand that the true value of money is not in its value of amassing assets but rather in its purchasing power to leverage oneself in life - in terms of freedom, independence, security, and ability to achieve dream, which one doesn't have to let go.
Definitely a book I will get back to read every year - again and again!
February 25, 2023
I honestly don’t get the hype for this book - most of the ideas are not particularly insightful nor original. The most interesting ones came from Nassim Taleb (i.e., tail risks, role of luck & risk), Charlie Munger (i.e., compounding, savings) and Benjamin Graham (i.e., margin of safety). While the advices are no doubt helpful (but common sensical) like don’t keep of with the Joneses, save, invest in low-cost index funds, etc. and written in a easy-to-follow way (albeit too LinkedIn-esque for my taste), this book leaves much to be desired and it’s obvious I am not particuarly impressed by it.
Regardless, a few interesting ideas below:
- The hardest financial skill is getting the goalpost to stop moving
- When you see someone driving a nice car, you don’t think “wow, the guy drving that car is cool,” but rather “wow, if I had that car people would think I’m cool”
- The first rule of compounding is never interrupt it unnecessarily
- When you spend money on things, you will end up with the things and not the money
- Rich is current income but wealth is hidden - spending money to show people how much money you have is the fastest way to have less money
- Understand your own time horizon is key in the money’s game. Don’t be persuaded by the actions and behaviors of people playing different games than you are (i.e., short-term traders, being 100% rational, driving up the price)
- Pessimism is persuasive. Assuming that something ugly will stay ugly is an easy forecast to make because it doesn’t require imagining the world changing.
Regardless, a few interesting ideas below:
- The hardest financial skill is getting the goalpost to stop moving
- When you see someone driving a nice car, you don’t think “wow, the guy drving that car is cool,” but rather “wow, if I had that car people would think I’m cool”
- The first rule of compounding is never interrupt it unnecessarily
- When you spend money on things, you will end up with the things and not the money
- Rich is current income but wealth is hidden - spending money to show people how much money you have is the fastest way to have less money
- Understand your own time horizon is key in the money’s game. Don’t be persuaded by the actions and behaviors of people playing different games than you are (i.e., short-term traders, being 100% rational, driving up the price)
- Pessimism is persuasive. Assuming that something ugly will stay ugly is an easy forecast to make because it doesn’t require imagining the world changing.
March 4, 2023
I love the title of this book "The Psychology of Money".
A great book to learn the psychology of money that we do not learn in school.
How do we feel about money?
What is money to us?
How do we treat money every day?
Getting money is one thing. Keeping it is another.
We need to learn how to save money.
The highest form of wealth is the ability to do what you want, when you want, with who you want, for as long as you want.
A great book to learn the psychology of money that we do not learn in school.
How do we feel about money?
What is money to us?
How do we treat money every day?
Getting money is one thing. Keeping it is another.
We need to learn how to save money.
The highest form of wealth is the ability to do what you want, when you want, with who you want, for as long as you want.
October 7, 2023
4.75 ⭐
GENRE - NON FICTION / SELF HELP.
I haven't been a regular reader so far but I always had a craving and attraction to books,this book was suggested to me by my good old friend Mr. Aditya Salvi owing to my recklessness with finances 😂 However this book did help me reinvent my intrest for reading not to forget to mention this was the 11th book I have read so far and started reading this book in May 2021.This book also brought within me a craving for Non Fiction Philosophy Literature.
About the book:-
Well most importantly this is not a book that will teach you to grow rich within the snap of your fingers, however it's a book which will give you insights on financial decisions and how making the right decision will help you accumulate a good amount of savings in a good period of time.
This book will be in good demand for sure in the years to come and will be at par when it comes to books like Rich Dad Poor Dad.
A very well written and well explained book and must read for all those people who are careless with money specifically.
Thank you 😊
GENRE - NON FICTION / SELF HELP.
I haven't been a regular reader so far but I always had a craving and attraction to books,this book was suggested to me by my good old friend Mr. Aditya Salvi owing to my recklessness with finances 😂 However this book did help me reinvent my intrest for reading not to forget to mention this was the 11th book I have read so far and started reading this book in May 2021.This book also brought within me a craving for Non Fiction Philosophy Literature.
About the book:-
Well most importantly this is not a book that will teach you to grow rich within the snap of your fingers, however it's a book which will give you insights on financial decisions and how making the right decision will help you accumulate a good amount of savings in a good period of time.
This book will be in good demand for sure in the years to come and will be at par when it comes to books like Rich Dad Poor Dad.
A very well written and well explained book and must read for all those people who are careless with money specifically.
Thank you 😊
August 23, 2023
"The hardest financial skill is getting the goalpost to stop moving.
It's a Timeless Lesson on Wealth, Greed, and Happiness, one of the best books on personal finance, by award-winning author Morgan Housel. This book is neatly written and contains a lot of wisdom and high-quality content.
Morgan Housel provides 19 stories in this book that explore the unusual ways people think about money. It includes observations on our relationship with money as well as information on how our financial thinking influences our life's most important decisions.
The premise of this book is that – doing well with money has little to do with how smart you are and a lot to do with how you behave. It inspires you to live a wealthy life by making smart decisions.
The psychology of money is one of the few books you’ll read back to front, multiple times. It’s been said that “Most books should be articles, most articles should be blog posts, and most blog posts should be tweets.” I couldn’t agree more.
Grab your copy here or here.
It's a Timeless Lesson on Wealth, Greed, and Happiness, one of the best books on personal finance, by award-winning author Morgan Housel. This book is neatly written and contains a lot of wisdom and high-quality content.
Morgan Housel provides 19 stories in this book that explore the unusual ways people think about money. It includes observations on our relationship with money as well as information on how our financial thinking influences our life's most important decisions.
The premise of this book is that – doing well with money has little to do with how smart you are and a lot to do with how you behave. It inspires you to live a wealthy life by making smart decisions.
The psychology of money is one of the few books you’ll read back to front, multiple times. It’s been said that “Most books should be articles, most articles should be blog posts, and most blog posts should be tweets.” I couldn’t agree more.
Grab your copy here or here.
February 1, 2021
An excellent book that covers how to think about one's money and wealth. Titles of the 20 pointers the author enlists in this book -
(1) No one's crazy : Your personal experiences with money make up maybe 0.00000001% of what's happened in the world, but maybe 80% of how you think the world works.
(2) Luck and Risk : Nothing is as good or as bad as it seems.
(3) Never enough : When rich people do crazy things.
(4) Confounding Compounding : $81.5 billion of Warren Buffet's $84.5 billion net worth came after his 65th birthday.
(5) Getting wealthy vs staying wealthy : Good investing is not necessarily about making good decisions. It's about consistently not screwing up.
(6) Tails, you win : You can be wrong half the time and still make a fortune!
(7) Freedom : Controlling your time is the highest dividend money pays.
(8) Man in the Car Paradox : No one is impressed with your possessions as much as you are.
(9) Wealth is what you don't see.
(10) Save money
(11) Reasonable vs Rational
(12) Surpise! : History is the study of change, ironically used as a map of the future.
(13) Room for Error : The most important part of every plan is planning on your plan not going according to plan.
(14) You'll change
(15) Nothing's free : Everything has a price, but not all prices appear on labels.
(16) You & Me : Beware taking financial cues from people playing a different game than you are.
(17) The seduction of Pessimism
(18) When you'll believe anything : Appealing fictions, and why stories are more powerful than statistics.
(19) All Together Now :
"Use money to gain control over your time, because not having control of your time is such a powerful and universal drag on happiness"
(20) Confessions: The psychology of author's own money.
The book also includes a postscript - A brief history of why the US consumer thinks the way they do - where he describes how post WW2, the US dealt with the economic crisis of millions of returning youth soldiers by adopting to a debt market - cheap credit cards and housing loans and a market that highly encouraged spending of all forms. This worked great for everyone, because the economy grew equally for everyone but things have changed dramatically since then, though the consumer attitude seems to have stuck through.
I loved the book ❤️ and highly recommend it to anyone who is looking to be proactive with their finances!
(1) No one's crazy : Your personal experiences with money make up maybe 0.00000001% of what's happened in the world, but maybe 80% of how you think the world works.
(2) Luck and Risk : Nothing is as good or as bad as it seems.
(3) Never enough : When rich people do crazy things.
(4) Confounding Compounding : $81.5 billion of Warren Buffet's $84.5 billion net worth came after his 65th birthday.
(5) Getting wealthy vs staying wealthy : Good investing is not necessarily about making good decisions. It's about consistently not screwing up.
(6) Tails, you win : You can be wrong half the time and still make a fortune!
(7) Freedom : Controlling your time is the highest dividend money pays.
(8) Man in the Car Paradox : No one is impressed with your possessions as much as you are.
(9) Wealth is what you don't see.
(10) Save money
(11) Reasonable vs Rational
(12) Surpise! : History is the study of change, ironically used as a map of the future.
(13) Room for Error : The most important part of every plan is planning on your plan not going according to plan.
(14) You'll change
(15) Nothing's free : Everything has a price, but not all prices appear on labels.
(16) You & Me : Beware taking financial cues from people playing a different game than you are.
(17) The seduction of Pessimism
(18) When you'll believe anything : Appealing fictions, and why stories are more powerful than statistics.
(19) All Together Now :
"Use money to gain control over your time, because not having control of your time is such a powerful and universal drag on happiness"
(20) Confessions: The psychology of author's own money.
The book also includes a postscript - A brief history of why the US consumer thinks the way they do - where he describes how post WW2, the US dealt with the economic crisis of millions of returning youth soldiers by adopting to a debt market - cheap credit cards and housing loans and a market that highly encouraged spending of all forms. This worked great for everyone, because the economy grew equally for everyone but things have changed dramatically since then, though the consumer attitude seems to have stuck through.
I loved the book ❤️ and highly recommend it to anyone who is looking to be proactive with their finances!
September 29, 2021
This is very good mostly because it's very simple. Twenty common-sense ideas that are so absurdly obvious if you think about but are hardly ever engaged with, seriously, basically account for all successes and failures when it comes to money.
The more obvious points:
Professional traders are about as good at it as random non-professional investors.
Compound interest is an ungodly cheat mode.
Getting your head on right is much more important than anything else you could do.
Prepare for the idea that shit might get real, good or bad, and figure it into everything you do.
Honestly, it's a great book. You don't have to be super financially literate in order to BECOME financially literate.
And it shouldn't surprise anyone that the current system is designed to appear horribly complicated and chaotic in order to discourage all but the top tier, but it IS possible to simplify just about anything if you have the will.
Books like this are very valuable for that very reason.
The more obvious points:
Professional traders are about as good at it as random non-professional investors.
Compound interest is an ungodly cheat mode.
Getting your head on right is much more important than anything else you could do.
Prepare for the idea that shit might get real, good or bad, and figure it into everything you do.
Honestly, it's a great book. You don't have to be super financially literate in order to BECOME financially literate.
And it shouldn't surprise anyone that the current system is designed to appear horribly complicated and chaotic in order to discourage all but the top tier, but it IS possible to simplify just about anything if you have the will.
Books like this are very valuable for that very reason.
March 30, 2022
The title and the blurb both are misleading.
The book is divided into 20 chapters and focuses only on what people did with their money in different eras, like during World War II, the Great Depression, the fall of the Soviet Union, etc. The sections are filled with reports, figures that bored me to death.
Also, if you're a beginner-level reader, do not pick this one. But if you're deep into this genre and an American, then maybe you can. I can go for an eternity to point out my disliking about this book, but I already waste enough time reading it, so not anymore.
Read the detailed review here - Books Charming
The book is divided into 20 chapters and focuses only on what people did with their money in different eras, like during World War II, the Great Depression, the fall of the Soviet Union, etc. The sections are filled with reports, figures that bored me to death.
Also, if you're a beginner-level reader, do not pick this one. But if you're deep into this genre and an American, then maybe you can. I can go for an eternity to point out my disliking about this book, but I already waste enough time reading it, so not anymore.
Read the detailed review here - Books Charming
December 23, 2023
این یکی از متفاوتترین کتابهایی بود که امسال خوندم. هیچوقت در مورد پول و مدیریت مالی مطالعه نکرده بودم و یه نظرم کتاب عالیای برای شروع بود. موضوعات این کتاب به سه دسته تقسیم میشه
یک. دقیقاً همون چیزی که اسم کتاب میگه: روانشناسی پول. اینکه مردم در مورد کسب و خرج پول چطور فکر میکنند و چی باعث میشه تصمیمات درست و غلطی بگیرند. ثروت واقعی و آزادی واقعی از کجا میاد؟ این بخشها واقعا عالی بودند و خیلی از مطالب کاملاً برای من جدید بودند
دو. توصیههای مالیای که به نظرم میاد مختص سرمایهگذاران و مخصوصاً آمریکاییهاست. من این بخش رو صرفاً با دید کنجکاوی خوندم چون به کار من نمیاد
سه. داستانهایی در مورد افراد موفق و اینکه چطور و چرا شکستهای بدی رو تجربه کردن. این بخشها هم برای منی که از دنیای پول و سرمایه چیزی نمیدونم جالب بود
در کل به نظرم کتاب قویایه که باعث میشه به مفهوم پول و ثروت کمی متفاوتتر نگاه کنید
کانال تلگرام ریویوها و دانلود کتابها و صوتیشون
Maede's Books
۱۴۰۲/۱۰/۲
یک. دقیقاً همون چیزی که اسم کتاب میگه: روانشناسی پول. اینکه مردم در مورد کسب و خرج پول چطور فکر میکنند و چی باعث میشه تصمیمات درست و غلطی بگیرند. ثروت واقعی و آزادی واقعی از کجا میاد؟ این بخشها واقعا عالی بودند و خیلی از مطالب کاملاً برای من جدید بودند
دو. توصیههای مالیای که به نظرم میاد مختص سرمایهگذاران و مخصوصاً آمریکاییهاست. من این بخش رو صرفاً با دید کنجکاوی خوندم چون به کار من نمیاد
سه. داستانهایی در مورد افراد موفق و اینکه چطور و چرا شکستهای بدی رو تجربه کردن. این بخشها هم برای منی که از دنیای پول و سرمایه چیزی نمیدونم جالب بود
در کل به نظرم کتاب قویایه که باعث میشه به مفهوم پول و ثروت کمی متفاوتتر نگاه کنید
کانال تلگرام ریویوها و دانلود کتابها و صوتیشون
Maede's Books
۱۴۰۲/۱۰/۲
April 6, 2024
5 stars
short review for busy readers:an intriguing short guide to how people think about, react to and interact with the idea of money. Lots of case examples, some highly informative or just interesting trivia. A bit intentionally repetitious to reach the slow kids in the class. Conversational style. Examples are very America-centric. Rather enlightening and very much worth the read for those who do not read about money very often.
in detail:
Do you know how you react to the idea of money? Is it the root of all evil, or the thing you daydream about? And your investment strategy, are you someone who follows the experts’ advice, sells immediately when the market gets turbulent or keeps the same portfolio for decades? Do you save for a rainy day, even if you have no idea when that rainy day will be, or is your home full of neat stuff you've bought?
All of these questions Housel says are based on where and when you were born and what lessons about finances you absorbed growing up. It’s often hard to understand the behaviour of someone born in a very different time and place to your own, but nobody is crazy or does irrational things.
Not when it comes to cash.
One of my favourite case examples is how the singer Rihanna almost went broke and sued her financial advisor. The advisor said, “do you really have to tell someone that if they spend all their money, they won’t have any?”
The answer is YES. It may sound like a no-brainer, but all of us really do need to be told these things directly and in plain language.
Here's a reason why: When people say they want to have a million dollars, they really mean they want to spend a million dollars. There’s no distinction in their mind between the two. But having and spending are absolutely not the same.
That’s the difference between ‘wealthy’ and ‘rich’.
Wealth = what you have in reserve.
Rich = what you can spend at any given moment.
Someone who has a million in the bank they hardly ever touch is wealthy. Someone who just got a year-end bonus and buys an expensive new car to impress their friends is rich. Being wealthy is often invisible, while being rich is often highly showy.
You want to aim for being wealthy, says Housel, not rich. A lesson Rihanna had to learn the hard way (and has).
Much of the advice in the book can be applied to general life, too, not just finance.
Like, optimism is believing that the overall trend of things is positive and progressive, even if there are setbacks and delays in the short term.
Like, the fact that far more in our lives goes back to luck than we’d like to think, so don’t be so hard on yourself when luck takes a holiday in Florida for a while and doesn't send you a postcard.
Like, you can make all sorts of rotten choices, as long as you get the key decisions right, because most things depend on only a few major data points…the rest doesn’t matter too much.
I got a lot out of this book and I’m sure you would, too. Even if some of it you might not want to hear because it could make you feel called out, or have been following an idea from a different time and place to current practical reality (which is a greater risk the older you get).
A very recommended 'think piece'.
short review for busy readers:an intriguing short guide to how people think about, react to and interact with the idea of money. Lots of case examples, some highly informative or just interesting trivia. A bit intentionally repetitious to reach the slow kids in the class. Conversational style. Examples are very America-centric. Rather enlightening and very much worth the read for those who do not read about money very often.
in detail:
Do you know how you react to the idea of money? Is it the root of all evil, or the thing you daydream about? And your investment strategy, are you someone who follows the experts’ advice, sells immediately when the market gets turbulent or keeps the same portfolio for decades? Do you save for a rainy day, even if you have no idea when that rainy day will be, or is your home full of neat stuff you've bought?
All of these questions Housel says are based on where and when you were born and what lessons about finances you absorbed growing up. It’s often hard to understand the behaviour of someone born in a very different time and place to your own, but nobody is crazy or does irrational things.
Not when it comes to cash.
One of my favourite case examples is how the singer Rihanna almost went broke and sued her financial advisor. The advisor said, “do you really have to tell someone that if they spend all their money, they won’t have any?”
The answer is YES. It may sound like a no-brainer, but all of us really do need to be told these things directly and in plain language.
Here's a reason why: When people say they want to have a million dollars, they really mean they want to spend a million dollars. There’s no distinction in their mind between the two. But having and spending are absolutely not the same.
That’s the difference between ‘wealthy’ and ‘rich’.
Wealth = what you have in reserve.
Rich = what you can spend at any given moment.
Someone who has a million in the bank they hardly ever touch is wealthy. Someone who just got a year-end bonus and buys an expensive new car to impress their friends is rich. Being wealthy is often invisible, while being rich is often highly showy.
You want to aim for being wealthy, says Housel, not rich. A lesson Rihanna had to learn the hard way (and has).
Much of the advice in the book can be applied to general life, too, not just finance.
Like, optimism is believing that the overall trend of things is positive and progressive, even if there are setbacks and delays in the short term.
Like, the fact that far more in our lives goes back to luck than we’d like to think, so don’t be so hard on yourself when luck takes a holiday in Florida for a while and doesn't send you a postcard.
Like, you can make all sorts of rotten choices, as long as you get the key decisions right, because most things depend on only a few major data points…the rest doesn’t matter too much.
I got a lot out of this book and I’m sure you would, too. Even if some of it you might not want to hear because it could make you feel called out, or have been following an idea from a different time and place to current practical reality (which is a greater risk the older you get).
A very recommended 'think piece'.
October 30, 2020
Such a short book with so much wisdom and generally good advice. Highly recommended.
On a side note, this book also made me realise that Hans Rosling’s Factfulness has such great advice on investing. We often get bogged down on what’s happening in the short run and do not appreciate the progress we’ve made in the long run. Progress happens too slowly to notice, but setbacks happen too quickly to ignore. And thus, in life and investing, optimism trumps pessimism in the long run.
Quotes:
1. The highest form of wealth is the ability to wake up every morning and say, “I can do whatever I want today."
2. In investing you must identify the price of success—volatility and loss amid the long backdrop of growth—and be willing to pay it.
3. “Enough” is not too little. “Enough” is realising that the opposite—an insatiable appetite for more—will push you to the point of regret.
4. Few things matter more with money than understanding your own time horizon and not being persuaded by the actions and behaviours of people playing different games than you are.
5. Optimism is the best bet for most people because the world tends to get better for most people most of the time. Optimism is a belief that the odds of a good outcome are in your favour over time, even when there will be setbacks along the way. The simple idea that most people wake up in the morning trying to make things a little better and more productive than wake up looking to cause trouble is the foundation of optimism. It’s not complicated. It’s not guaranteed, either. It’s just the most reasonable bet for most people, most of the time.
6. Use money to gain control over your time, because not having control of your time is such a powerful and universal drag on happiness. The ability to do what you want, when you want, with who you want, for as long as you want to, pays the highest dividend that exists in finance.
7. The first rule of compounding is to never interrupt it unnecessarily.
8. Nothing is as good or as bad as it seems.
On a side note, this book also made me realise that Hans Rosling’s Factfulness has such great advice on investing. We often get bogged down on what’s happening in the short run and do not appreciate the progress we’ve made in the long run. Progress happens too slowly to notice, but setbacks happen too quickly to ignore. And thus, in life and investing, optimism trumps pessimism in the long run.
Quotes:
1. The highest form of wealth is the ability to wake up every morning and say, “I can do whatever I want today."
2. In investing you must identify the price of success—volatility and loss amid the long backdrop of growth—and be willing to pay it.
3. “Enough” is not too little. “Enough” is realising that the opposite—an insatiable appetite for more—will push you to the point of regret.
4. Few things matter more with money than understanding your own time horizon and not being persuaded by the actions and behaviours of people playing different games than you are.
5. Optimism is the best bet for most people because the world tends to get better for most people most of the time. Optimism is a belief that the odds of a good outcome are in your favour over time, even when there will be setbacks along the way. The simple idea that most people wake up in the morning trying to make things a little better and more productive than wake up looking to cause trouble is the foundation of optimism. It’s not complicated. It’s not guaranteed, either. It’s just the most reasonable bet for most people, most of the time.
6. Use money to gain control over your time, because not having control of your time is such a powerful and universal drag on happiness. The ability to do what you want, when you want, with who you want, for as long as you want to, pays the highest dividend that exists in finance.
7. The first rule of compounding is to never interrupt it unnecessarily.
8. Nothing is as good or as bad as it seems.
February 28, 2023
I believe that any book that makes you ponder over and over and simultaneously stimulates your diligent concentration before you reach any conclusion - has served the purpose of the time invested in reading. The psychology of money did this and I found the perspectives that Morgan Housel has put forward quite intriguing.
The power and the importance of compounding is explained with a simple yet interesting way.
All in all, a good read for developing new perspectives about finances while keeping both your need and wants in your mind .
4/5
The power and the importance of compounding is explained with a simple yet interesting way.
All in all, a good read for developing new perspectives about finances while keeping both your need and wants in your mind .
4/5
February 15, 2023
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Contrary to most people reading this book, I read it because I have a saving problem!! It is weird but I think a lot of past experience makes me always scared of what the future hides so I feed bad when I spend money which is a bit illogical. There are a lot of positive reviews for this book and it has a staggering average rating of 4.4 which encouraged me to pick it up.
The book is a bit different from what I expected. It does not have the typical preachy voice of non-fiction author who makes you feel that they have unlocked the secrets of the universe. The author tries to present facts here through studies and real life examples which is a very good way to convincing readers.
It will not tell you to do so and so to get rich but it will try to explain why are we likely to do some things and those are written in 20 chapters each focusing on a simple concept. I said that I have a saving problem and it makes me sound a bit crazy and funnily enough the first concept was that no one’s crazy and that we tend to judge people from our own experiences which compose a really tiny fraction of what’s happened in the world. And by the end I was convinced that I was doing a lot of good things that I thought were bad.
A simple yet very intriguing book about money that tries to make us understand our financial selves without sounding preachy. It was different from what I expected but still a very useful book!
“Things that have never happened before happen all the time.”
Contrary to most people reading this book, I read it because I have a saving problem!! It is weird but I think a lot of past experience makes me always scared of what the future hides so I feed bad when I spend money which is a bit illogical. There are a lot of positive reviews for this book and it has a staggering average rating of 4.4 which encouraged me to pick it up.
The book is a bit different from what I expected. It does not have the typical preachy voice of non-fiction author who makes you feel that they have unlocked the secrets of the universe. The author tries to present facts here through studies and real life examples which is a very good way to convincing readers.
It will not tell you to do so and so to get rich but it will try to explain why are we likely to do some things and those are written in 20 chapters each focusing on a simple concept. I said that I have a saving problem and it makes me sound a bit crazy and funnily enough the first concept was that no one’s crazy and that we tend to judge people from our own experiences which compose a really tiny fraction of what’s happened in the world. And by the end I was convinced that I was doing a lot of good things that I thought were bad.
A simple yet very intriguing book about money that tries to make us understand our financial selves without sounding preachy. It was different from what I expected but still a very useful book!
October 30, 2020
ما الذي يجعل الناس سعداء!؟
.
.
يقول «Morgan Housel» في كتابه الجميل The Psychology Of Money :
أعلى شكل للثروة هو القدرة على الاستيقاظ كل صباح والقول ، "يمكنني أن أفعل ما أريد اليوم"
يريد الناس أن يصبحوا أكثر ثراءً لكي يصبحوا أكثر سعادة. السعادة موضوع معقد لأن كل شخص مختلف. ولكن إذا كان هناك قاسم مشترك في السعادة فهو أن الناس يريدون التحكم في حياتهم.
القدرة على فعل ما تريد ، وقتما تريد ، مع من تريد ، طالما أردت ، لا تقدر بثمن. إنها أعلى أرباح تؤمنها الأموال.
كان «أنجوس كامبل» عالمًا نفسيًا في جامعة ميشيغان. وُلد في عام 1910 ، وأجرى بحثه في عصر كان فيه علم النفس يركز بشكل كبير على الاضطرابات التي تسببت في هبوط الناس - أشياء مثل الاكتئاب والقلق والفصام.
أراد كامبل أن يعرف ما الذي يجعل الناس سعداء. يبدأ كتابه الصادر عام 1981 بعنوان The Sense of Wellbeing in America بالإشارة إلى أن الناس عمومًا أكثر سعادة مما افترض العديد من علماء النفس. لكن من الواضح أن البعض كان أداؤه أفضل من الآخرين. ولا يمكنك بالضرورة تصنيفهم حسب الدخل أو الجغرافيا أو التعليم ، لأن الكثيرين في كل فئة من هذه الفئات ينتهي بهم الأمر بالتعاسة المزمنة.
كان القاسم المشترك الأقوى للسعادة بسيطًا. لخص كامبل الأمر بقوله:
«إن امتلاك إحساس قوي بالتحكم في حياة المرء هو مؤشر يمكن الاعتماد عليه للمشاعر الإيجابية والرفاهية أكثر من أي من الظروف الموضوعية للحياة التي أخذناها في الاعتبار»
أكثر من راتبك. أكثر من حجم منزلك. أكثر من هيبة وظيفتك. التحكم في فعل ما تريد ، عندما تريد ، مع الأشخاص الذين تريدهم ، هو أوسع متغير يجعل الناس سعداء.
أعظم قيمة جوهرية للمال - وهذا لا يمكن المبالغة فيه - هي قدرته على منحك التحكم في وقتك. للحصول ، شيئًا فشيئًا ، على مستوى من الاستقلالية التي تأتي من الأصول غير المنفقة والتي تمنحك سيطرة أكبر على ما يمكنك فعله ومتى يمكنك القيام به.
إن استخدام أموالك لشراء الوقت والخيارات له فائدة في نمط الحياة يمكن أن تنافسها القليل من السلع الفاخرة.
خلال الكلية كنت أرغب في أن أصبح مصرفيًا استثماريًا. كان هناك سبب واحد فقط: لقد كسبوا الكثير من المال. كان هذا هو الدافع الوحيد ، والذي كنت معتقداً بنسبة 100٪ أنه سيجعلني أسعد بمجرد أن أحصل عليه. حصلت على تدريب صيفي في أحد البنوك الاستثمارية في لوس أنجلوس في سنتي الأولى ، واعتقدت أنني فزت في يانصيب الوظائف. هذا كل ما أردت.
في أول يوم لي ، أدركت لماذا يربح المصرفيون الاستثماريون الكثير من المال: إنهم يعملون لساعات أطول وأكثر مما كنت أعرف أن البشر يستطيعون التعامل معه. في الواقع ، لا يستطيع معظم الناس التعامل معه. كانت العودة إلى المنزل قبل منتصف الليل ترفاً ، وكان هناك قول مأثور في المكتب: "إذا لم تأت إلى العمل يوم السبت ، فلا تكلف نفسك عناء العودة يوم الأحد". كانت الوظيفة محفزة فكرياً ، وراتب جيد ، وجعلتني أشعر بأهميتي. لكن في كل ثانية من وقتي أصبحت عبداً لمطالب رئيسي ، والتي كانت كافية لتحويلها إلى واحدة من أكثر التجارب بؤسًا في حياتي. لقد كان تدريبًا لمدة أربعة أشهر. لكنني صمدت لشهر واحد .
أصعب شيء في هذا هو أنني أحببت العمل. وأردت أن أعمل بجد. لكن القيام بشيء تحبه وفقًا لجدول زمني لا يمكنك التحكم فيه ، يمكن أن يشعرك بنفس شعور القيام بشيء تكرهه.
لخص «جونا بيرجر» ، أستاذ التسويق بجامعة بنسلفانيا ، الأمر جيدًا:
(يحب الناس أن يشعروا بأنهم في مركز السيطرة - في مقعد السائق. عندما نحاول حملهم على القيام بشيء ما ، فإنهم يشعرون بعدم القدرة. وبدلاً من الشعور بأنهم اتخذوا القرار ، فإنهم يشعرون أننا صنعناه لهم. لذلك يقولون لا أو يفعلون شيئًا آخر ، حتى عندما يكونون سعداء في الأصل بالمتابعة)
عندما تقبل مدى صحة هذا البيان ، فإنك تدرك أن مواءمة المال مع الحياة التي تتيح لك القيام بما تريد ، عندما تريد ، مع من تريد ، وأينما تريد ، وطالما تريد ، له عائد لا يصدق.
كتب «ديريك سيفرس» ، وهو رجل أعمال ناجح ، ذات مرة عن صديق طلب منه أن يروي له كيف أصبح ثريًا:
حصلت على وظيفة يومية في وسط مانهاتن مقابل الحد الأدنى للأجور ... لم أتناول الطعام في الخارج ولم أستقل سيارة أجرة مطلقًا. كانت تكلفة معيشتي حوالي 1000 دولار في الشهر ، وكنت أكسب 1800 دولار شهريًا. فعلت هذا لمدة عامين ، ووفرت ما يصل إلى 12000 دولار. كان عمري 22 سنة.
بمجرد أن حصلت على 12000 دولار ، كان بإمكاني ترك وظيفتي وأن أصبح موسيقيًا بدوام كامل. كنت أعلم أنه يمكنني الحصول على عدد قليل من الدولارات شهريًا لدفع تكاليف المعيشة. لذلك كنت حرا. تركت وظيفتي بعد شهر ولم أحصل على وظيفة مرة أخرى.
عندما انتهيت من إخبار صديقي بهذه القصة ، طلب المزيد. قلت لا ، هذا كل شيء. قال: "لا ، ماذا عن متى بعت شركتك؟"
قلت له : لا ، هذا لم يحدث فرقاً كبيراً في حياتي. كان هذا فقط المزيد من المال في البنك. حدث الفرق عندما كان عمري 22
.
ترجمة ماهر رزوق
.
.
يقول «Morgan Housel» في كتابه الجميل The Psychology Of Money :
أعلى شكل للثروة هو القدرة على الاستيقاظ كل صباح والقول ، "يمكنني أن أفعل ما أريد اليوم"
يريد الناس أن يصبحوا أكثر ثراءً لكي يصبحوا أكثر سعادة. السعادة موضوع معقد لأن كل شخص مختلف. ولكن إذا كان هناك قاسم مشترك في السعادة فهو أن الناس يريدون التحكم في حياتهم.
القدرة على فعل ما تريد ، وقتما تريد ، مع من تريد ، طالما أردت ، لا تقدر بثمن. إنها أعلى أرباح تؤمنها الأموال.
كان «أنجوس كامبل» عالمًا نفسيًا في جامعة ميشيغان. وُلد في عام 1910 ، وأجرى بحثه في عصر كان فيه علم النفس يركز بشكل كبير على الاضطرابات التي تسببت في هبوط الناس - أشياء مثل الاكتئاب والقلق والفصام.
أراد كامبل أن يعرف ما الذي يجعل الناس سعداء. يبدأ كتابه الصادر عام 1981 بعنوان The Sense of Wellbeing in America بالإشارة إلى أن الناس عمومًا أكثر سعادة مما افترض العديد من علماء النفس. لكن من الواضح أن البعض كان أداؤه أفضل من الآخرين. ولا يمكنك بالضرورة تصنيفهم حسب الدخل أو الجغرافيا أو التعليم ، لأن الكثيرين في كل فئة من هذه الفئات ينتهي بهم الأمر بالتعاسة المزمنة.
كان القاسم المشترك الأقوى للسعادة بسيطًا. لخص كامبل الأمر بقوله:
«إن امتلاك إحساس قوي بالتحكم في حياة المرء هو مؤشر يمكن الاعتماد عليه للمشاعر الإيجابية والرفاهية أكثر من أي من الظروف الموضوعية للحياة التي أخذناها في الاعتبار»
أكثر من راتبك. أكثر من حجم منزلك. أكثر من هيبة وظيفتك. التحكم في فعل ما تريد ، عندما تريد ، مع الأشخاص الذين تريدهم ، هو أوسع متغير يجعل الناس سعداء.
أعظم قيمة جوهرية للمال - وهذا لا يمكن المبالغة فيه - هي قدرته على منحك التحكم في وقتك. للحصول ، شيئًا فشيئًا ، على مستوى من الاستقلالية التي تأتي من الأصول غير المنفقة والتي تمنحك سيطرة أكبر على ما يمكنك فعله ومتى يمكنك القيام به.
إن استخدام أموالك لشراء الوقت والخيارات له فائدة في نمط الحياة يمكن أن تنافسها القليل من السلع الفاخرة.
خلال الكلية كنت أرغب في أن أصبح مصرفيًا استثماريًا. كان هناك سبب واحد فقط: لقد كسبوا الكثير من المال. كان هذا هو الدافع الوحيد ، والذي كنت معتقداً بنسبة 100٪ أنه سيجعلني أسعد بمجرد أن أحصل عليه. حصلت على تدريب صيفي في أحد البنوك الاستثمارية في لوس أنجلوس في سنتي الأولى ، واعتقدت أنني فزت في يانصيب الوظائف. هذا كل ما أردت.
في أول يوم لي ، أدركت لماذا يربح المصرفيون الاستثماريون الكثير من المال: إنهم يعملون لساعات أطول وأكثر مما كنت أعرف أن البشر يستطيعون التعامل معه. في الواقع ، لا يستطيع معظم الناس التعامل معه. كانت العودة إلى المنزل قبل منتصف الليل ترفاً ، وكان هناك قول مأثور في المكتب: "إذا لم تأت إلى العمل يوم السبت ، فلا تكلف نفسك عناء العودة يوم الأحد". كانت الوظيفة محفزة فكرياً ، وراتب جيد ، وجعلتني أشعر بأهميتي. لكن في كل ثانية من وقتي أصبحت عبداً لمطالب رئيسي ، والتي كانت كافية لتحويلها إلى واحدة من أكثر التجارب بؤسًا في حياتي. لقد كان تدريبًا لمدة أربعة أشهر. لكنني صمدت لشهر واحد .
أصعب شيء في هذا هو أنني أحببت العمل. وأردت أن أعمل بجد. لكن القيام بشيء تحبه وفقًا لجدول زمني لا يمكنك التحكم فيه ، يمكن أن يشعرك بنفس شعور القيام بشيء تكرهه.
لخص «جونا بيرجر» ، أستاذ التسويق بجامعة بنسلفانيا ، الأمر جيدًا:
(يحب الناس أن يشعروا بأنهم في مركز السيطرة - في مقعد السائق. عندما نحاول حملهم على القيام بشيء ما ، فإنهم يشعرون بعدم القدرة. وبدلاً من الشعور بأنهم اتخذوا القرار ، فإنهم يشعرون أننا صنعناه لهم. لذلك يقولون لا أو يفعلون شيئًا آخر ، حتى عندما يكونون سعداء في الأصل بالمتابعة)
عندما تقبل مدى صحة هذا البيان ، فإنك تدرك أن مواءمة المال مع الحياة التي تتيح لك القيام بما تريد ، عندما تريد ، مع من تريد ، وأينما تريد ، وطالما تريد ، له عائد لا يصدق.
كتب «ديريك سيفرس» ، وهو رجل أعمال ناجح ، ذات مرة عن صديق طلب منه أن يروي له كيف أصبح ثريًا:
حصلت على وظيفة يومية في وسط مانهاتن مقابل الحد الأدنى للأجور ... لم أتناول الطعام في الخارج ولم أستقل سيارة أجرة مطلقًا. كانت تكلفة معيشتي حوالي 1000 دولار في الشهر ، وكنت أكسب 1800 دولار شهريًا. فعلت هذا لمدة عامين ، ووفرت ما يصل إلى 12000 دولار. كان عمري 22 سنة.
بمجرد أن حصلت على 12000 دولار ، كان بإمكاني ترك وظيفتي وأن أصبح موسيقيًا بدوام كامل. كنت أعلم أنه يمكنني الحصول على عدد قليل من الدولارات شهريًا لدفع تكاليف المعيشة. لذلك كنت حرا. تركت وظيفتي بعد شهر ولم أحصل على وظيفة مرة أخرى.
عندما انتهيت من إخبار صديقي بهذه القصة ، طلب المزيد. قلت لا ، هذا كل شيء. قال: "لا ، ماذا عن متى بعت شركتك؟"
قلت له : لا ، هذا لم يحدث فرقاً كبيراً في حياتي. كان هذا فقط المزيد من المال في البنك. حدث الفرق عندما كان عمري 22
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ترجمة ماهر رزوق
September 16, 2021
DISCLAIMER: If you are looking for a book that would give you "tips" on investing or trading, don't pick this one up.
First thoughts - A super easy and fun read, but it was a little different than what I had expected. Just going by the title of the book, I had anticipated that the author would probably take a deep dive into the behavioral economics and decision analysis of all aspects of money in our life but it turned out to be a rudimentary take (albeit an insightful one) on these topics.
This book can be read by people of all ages and it would probably make sense to them, you don't need to have much background in investing, trading or finance in general. Each chapter of the book is essentially a broad "psycho-financial" concept (if at all "psycho-financial" is a word, if not I just coined it and you likely understand what it means) which the author tries to elucidate by a mixture of real-world examples both of finance and non-finance flavors, quotes from renowned people and excerpts from other famous books. For example, when explaining the concept of compounding assets, the author uses the example of ice ages, and how a small starting base can lead to results so extraordinary just because a little growth serves as the fuel for future growth. You just need to give it time. Warren Buffet's skill is investing but his secret is time.
Most of the lessons in the book are trivial commonplace by nature but as it is often said, cliches exist because they work quite well in real life. Some major personal takeaways from the book which I can safely recall are:
1. Finance and investing is not HARD SCIENCE. Your success is driven by luck and how you behave and often your intelligence and efforts don't play a role.
2. Set your own financial goals, what works for someone else might not work for you because their goals are different. When people start following each other randomly, just because something is
"talk of the town", it leads to bubbles. Depending on your goal, follow a long term strategy and stick to it, even in lean economic years.
3. There is a semantic and experiential difference between being rich and being wealthy. One should focus on being the latter rather than the former. Simply put, rich folks flash money while people become wealthy by saving money. Unfortunately, we often underestimate the power of frugality and savings, and put more faith in investing strategies. If we just try to focus on being less extravagant, it can often have more compounding long term effects on our wealth than a supposedly high return investing strategy.
4. You're an emotional entity. Trust your gut more than what your rational mind asks you to do. If you are not comfortable in investing in the stock market, as it makes you more anxious, don't do it. Invest in something safer which at least guarantees you a good night's sleep. Your rational mind might say that it is probably better to invest in the stock market for high ROI but if it leads to anxiety, then what's the point of it?
The book is replete with great quotes which I hope I'll remember. Some of my favorites were:
First thoughts - A super easy and fun read, but it was a little different than what I had expected. Just going by the title of the book, I had anticipated that the author would probably take a deep dive into the behavioral economics and decision analysis of all aspects of money in our life but it turned out to be a rudimentary take (albeit an insightful one) on these topics.
This book can be read by people of all ages and it would probably make sense to them, you don't need to have much background in investing, trading or finance in general. Each chapter of the book is essentially a broad "psycho-financial" concept (if at all "psycho-financial" is a word, if not I just coined it and you likely understand what it means) which the author tries to elucidate by a mixture of real-world examples both of finance and non-finance flavors, quotes from renowned people and excerpts from other famous books. For example, when explaining the concept of compounding assets, the author uses the example of ice ages, and how a small starting base can lead to results so extraordinary just because a little growth serves as the fuel for future growth. You just need to give it time. Warren Buffet's skill is investing but his secret is time.
Most of the lessons in the book are trivial commonplace by nature but as it is often said, cliches exist because they work quite well in real life. Some major personal takeaways from the book which I can safely recall are:
1. Finance and investing is not HARD SCIENCE. Your success is driven by luck and how you behave and often your intelligence and efforts don't play a role.
2. Set your own financial goals, what works for someone else might not work for you because their goals are different. When people start following each other randomly, just because something is
"talk of the town", it leads to bubbles. Depending on your goal, follow a long term strategy and stick to it, even in lean economic years.
3. There is a semantic and experiential difference between being rich and being wealthy. One should focus on being the latter rather than the former. Simply put, rich folks flash money while people become wealthy by saving money. Unfortunately, we often underestimate the power of frugality and savings, and put more faith in investing strategies. If we just try to focus on being less extravagant, it can often have more compounding long term effects on our wealth than a supposedly high return investing strategy.
4. You're an emotional entity. Trust your gut more than what your rational mind asks you to do. If you are not comfortable in investing in the stock market, as it makes you more anxious, don't do it. Invest in something safer which at least guarantees you a good night's sleep. Your rational mind might say that it is probably better to invest in the stock market for high ROI but if it leads to anxiety, then what's the point of it?
The book is replete with great quotes which I hope I'll remember. Some of my favorites were:
The line between “inspiringly bold” and “foolishly reckless” can be a millimeter thick and only visible with hindsight.
Getting money requires taking risks, being optimistic, and putting yourself out there. But keeping money requires the opposite of taking risk. It requires humility, and fear that what you’ve made can be taken away from you just as fast.
Money’s greatest intrinsic value—and this can’t be overstated— is its ability to give you control over your time.
YOU’RE NOT a spreadsheet. You’re a person. A screwed up, emotional person.
It sounds trivial, but thinking of market volatility as a fee rather than a fine is an important part of developing the kind of mindset that lets you stick around long enough for investing gains to work in your favor.
Pessimism isn’t just more common than optimism. It also sounds smarter. It’s intellectually captivating, and it’s paid more attention than optimism, which is often viewed as being oblivious to risk.
January 31, 2022
Sebagai orang yang menempuh pendidikan ekonomi dan telah menjalankan beberapa prinsip yang disajikan dalam buku ini, buku ini sangat-sangat afirmatif bagi saya. Rasanya, saya menemukan alasan mengapa saya melakukan A dan bukan B, mengapa saya tidak setuju dengan B dan A, dan mengapa nasihat-nasihat yang menurut saya "sudah seharusnya dilakukan oleh semua orang" ternyata kenyataannya tidak seperti itu.
Orang lain belum tentu memiliki privilege dan mindset yang sama seperti saya. Dan buku ini hadir untuk itu.
Beberapa kali saya membaca mengenai perencanaan keuangan pribadi, baik melalui konten yang dibuat oleh para kreator Instagram atau buku ekonomi, pendekatan dalam buku ini jauh lebih humanis dan tidak taktikal, cocok untuk orang yang bahkan sangat awam sekalipun mengenai prinsip-prinsip ekonomi. Ditambah lagi, narasi pendek-pendek yang dibangun Housel sangat dekat dengan kita dan beberapa kali mampu membuat saya berpikir ulang atas keputusan-keputusan keuangan yang saya ambil.
Dan, nasihat ibu saya diamini keras-keras oleh Housel di buku ini, "Udah, nabung aja, buat jaga-jaga. Jangan nabung kalo kamu lagi pengen sesuatu aja." 😂
Orang lain belum tentu memiliki privilege dan mindset yang sama seperti saya. Dan buku ini hadir untuk itu.
Beberapa kali saya membaca mengenai perencanaan keuangan pribadi, baik melalui konten yang dibuat oleh para kreator Instagram atau buku ekonomi, pendekatan dalam buku ini jauh lebih humanis dan tidak taktikal, cocok untuk orang yang bahkan sangat awam sekalipun mengenai prinsip-prinsip ekonomi. Ditambah lagi, narasi pendek-pendek yang dibangun Housel sangat dekat dengan kita dan beberapa kali mampu membuat saya berpikir ulang atas keputusan-keputusan keuangan yang saya ambil.
Dan, nasihat ibu saya diamini keras-keras oleh Housel di buku ini, "Udah, nabung aja, buat jaga-jaga. Jangan nabung kalo kamu lagi pengen sesuatu aja." 😂
June 13, 2022
Did I miss something?
Might have to reread this shortie or read some kind of analysis — this was nothing new and not very groundbreaking. Not that it needed to be, but I was expecting more based on the raving reviews I've seen online.
Not bad, not great, just generally good things to know if you don't already or feel like you need a reminder.
Might have to reread this shortie or read some kind of analysis — this was nothing new and not very groundbreaking. Not that it needed to be, but I was expecting more based on the raving reviews I've seen online.
Not bad, not great, just generally good things to know if you don't already or feel like you need a reminder.
February 21, 2022
Đọc lại lần 02 để làm booktalk, phân tích sách với bà con.
Lần 02 này mình đã không còn nhiều ấn tượng mạnh như lần đầu. Lần trước nghe sách nói thấy mượt mà, lần này đọc kĩ thì thấy chất lượng dịch cũng vừa phải, hơi khó đọc một tẹo.
Đọc sách nên thấy nhiều vấn đề lập luận. Nhiều nhận bị lặp. Tuy vậy đây vẫn là một cuốn sách hay với nhiều bài học thú vị, mới mẻ, quan trọng về mối quan hệ của chúng ta với tiền.
----
29/9/2021
Cuốn sách nên đọc nếu bạn nào muốn tìm hiểu về đầu tư tài chính dưới góc độ cá nhân.
Mình đọc sách... tò mò là chủ yếu. Vì hổng hiểu người ta viết tâm lý về tiền l�� viết cái gì, hoá ra là mối quan hệ với tiền. Cũng là một cách tiếp cận hay ho, thú vị.
Sách viết dễ hiểu, ai cũng có thể đọc được. Mình cũng học thêm được nhiều điều mới mới về tự do, về tiết kiệm, về vai trò của may mắn trong mỗi thành công, thất baị. Tác giả cũng có khiếu hài hước nên trải nghiệm đọc của mình cũng thú vị hơn. Mỗi chương đều làm tốt vai trò cung cấp thêm cho độc giả những góc nhìn hữu ích để có thêm sự hiểu biết và tự tin với những quyết định đầu tư.
Lần 02 này mình đã không còn nhiều ấn tượng mạnh như lần đầu. Lần trước nghe sách nói thấy mượt mà, lần này đọc kĩ thì thấy chất lượng dịch cũng vừa phải, hơi khó đọc một tẹo.
Đọc sách nên thấy nhiều vấn đề lập luận. Nhiều nhận bị lặp. Tuy vậy đây vẫn là một cuốn sách hay với nhiều bài học thú vị, mới mẻ, quan trọng về mối quan hệ của chúng ta với tiền.
----
29/9/2021
Cuốn sách nên đọc nếu bạn nào muốn tìm hiểu về đầu tư tài chính dưới góc độ cá nhân.
Mình đọc sách... tò mò là chủ yếu. Vì hổng hiểu người ta viết tâm lý về tiền l�� viết cái gì, hoá ra là mối quan hệ với tiền. Cũng là một cách tiếp cận hay ho, thú vị.
Sách viết dễ hiểu, ai cũng có thể đọc được. Mình cũng học thêm được nhiều điều mới mới về tự do, về tiết kiệm, về vai trò của may mắn trong mỗi thành công, thất baị. Tác giả cũng có khiếu hài hước nên trải nghiệm đọc của mình cũng thú vị hơn. Mỗi chương đều làm tốt vai trò cung cấp thêm cho độc giả những góc nhìn hữu ích để có thêm sự hiểu biết và tự tin với những quyết định đầu tư.
October 1, 2021
When your favorite financial writer comes out with a book, its okay to drop everything to read it. I've been a fan of Morgan Housel's writing for many years. The idea for the book 'The Psychology of Money' came from his long article by the same name. He likes to keep his writing concise but it packs a punch. The best part of his writing is that he takes the lessons from history, finance, psychology, etc. and applies it to everyday personal finance. He has this uncanny ability to look at something as everyone else and see something different in it. This book can be read very quickly, but the whole point of reading it is to stop and think about how these stories apply to our own behavior. He makes us think about our relationship with money. Our behavior impacts our financial success, more than intelligence or anything else. Wealth is not really about what others think about us, it’s more about using our money to control how we spend our time and live our lives. Investing isn’t a race to be won; it’s a more of a test of our character. He examines personal finance through the lens of human behavior.
A few gems in Morgan's own words:
• How you behave is more important than what you know about money.
• Manage your money in a way that helps you sleep at night.
• Time is the most powerful force in investing.
• A small minority of things account for the majority of outcomes.
• Define the game you’re playing, and make sure your actions are not being influenced by people playing a different game.
• There is no single right answer; just the answer that works for you.
• No one is impressed with your possessions as much as you are.
• Savings that aren’t earmarked for anything in particular is a hedge against life’s inevitable ability to surprise the hell out of you at the worst possible moment.
• Endurance is what makes compounding magic over time.
• The highest form of wealth is the ability to wake up every morning and say, “I can do whatever I want today.”
You can check a longer version of the review at my blog:
https://milandeep.substack.com/p/the-...
A few gems in Morgan's own words:
• How you behave is more important than what you know about money.
• Manage your money in a way that helps you sleep at night.
• Time is the most powerful force in investing.
• A small minority of things account for the majority of outcomes.
• Define the game you’re playing, and make sure your actions are not being influenced by people playing a different game.
• There is no single right answer; just the answer that works for you.
• No one is impressed with your possessions as much as you are.
• Savings that aren’t earmarked for anything in particular is a hedge against life’s inevitable ability to surprise the hell out of you at the worst possible moment.
• Endurance is what makes compounding magic over time.
• The highest form of wealth is the ability to wake up every morning and say, “I can do whatever I want today.”
You can check a longer version of the review at my blog:
https://milandeep.substack.com/p/the-...
November 23, 2020
Morgan Housel does well with this book.
But only for readers who consider themselves novices with money. Anyone outside that category could possibly find themselves uninspired to get to the end. At the beginning of the 19th chapter, the author congratulates the reader for making it that far. *eyeroll*
Credit where due, the book is well written. It’s easy to read and understand. However, it fails to generate any interest or excitement about the subject. The author, I felt, consciously included several stories to keep the reader engaged. But I didn’t buy the book for the stories, did I?
If you find yourself as unmotivated as I was while reading this book, jump to chapter 19 for a summary. You’ll read about every chapter the author labored over in two sentences or less.
Save yourself time, money and other finite resources.
But only for readers who consider themselves novices with money. Anyone outside that category could possibly find themselves uninspired to get to the end. At the beginning of the 19th chapter, the author congratulates the reader for making it that far. *eyeroll*
Credit where due, the book is well written. It’s easy to read and understand. However, it fails to generate any interest or excitement about the subject. The author, I felt, consciously included several stories to keep the reader engaged. But I didn’t buy the book for the stories, did I?
If you find yourself as unmotivated as I was while reading this book, jump to chapter 19 for a summary. You’ll read about every chapter the author labored over in two sentences or less.
Save yourself time, money and other finite resources.
January 5, 2022
Easy, fast to read and some advice (jump to chapter 19 to save yourself)
Yet, this book is hyped for nothing. I wonder if ratings have been bought just to kick sales.
Too many unnecessary historical short stories, comparisons including companies, dates, numbers, rates, etc all to come to simple conclusions.
Conclusions which could have been substantiated by plain logic that, most of the time, have nothing to do with money, but everything with behaviour and how we are wired.
Guess the chapters had to be filled to make a book right?
This book wasn't worth an investment (the money I spent on it) simply put..
Yet, this book is hyped for nothing. I wonder if ratings have been bought just to kick sales.
Too many unnecessary historical short stories, comparisons including companies, dates, numbers, rates, etc all to come to simple conclusions.
Conclusions which could have been substantiated by plain logic that, most of the time, have nothing to do with money, but everything with behaviour and how we are wired.
Guess the chapters had to be filled to make a book right?
This book wasn't worth an investment (the money I spent on it) simply put..
December 5, 2022
Vērtīga lasāmviela, lai apdomātu, cik racionāli vai emocionāli tērējam/ieguldām naudu. Par to, cik svarīgi veidot iekrājumus/drošības spilvenu. Daudz arī par akciju tirgiem, kas man nebija aktuāli, tomēr pasniegts gana vienkārši, tāpēc neizlaidu arī to. Šīs grāmatas bonuss patiešām ir vienkāršā valoda, daudz piemēru no vēstures, fin. krīzēm un pārdomas par riskiem/zaudējumiem. Par spīti tam, ka grāmata ir par materiālām vērtībām, patiesībā tā uzsver, cik svarīgi ir neiztērēt visu laiku, pelnot naudu, jo laiks pats par sevi ir daudz lielāka vērtība.
March 27, 2023
I came for Money lesson, yet I got a life lesson
You know what irony is?
At the first, I'm going to say as my opening for this review, "This book is what I called short, but memorable." Believe me, I'm that girl who's ready to give it 5 stars.
BUT just after chapter 6, I think, "I SNAPPED!"
like, "snap-snap!"
All of the examples he sets for us sound like fiction to me, like when he did a rough calculation and served it right to the pages.
And I recalled almost throwing my book like, "What the hell?" It's exciting to read."
UNTIL...... It wasn't
God spoke to me, and he said, "You're wrong, my child." And I was like, "WTF I'm reading right now?!"
The author gave us a lot of examples after a very legit story, and of course with all of the "WISERICHMEN SAY STUFF."
Me at early chapters:
"OMG, this man is amazing with his thoughts and his words."
But then I gave some thought to his thought, and then BOOM! It hits you differently.
It went from PERFECT
to HUH...??? HOLD ON FOR A SEC! 🤔
MY THOUGHTS:
•I love that this book is short, so it's easy to read, but instead it backfired. The author gave us a legit story from an actual event, but he left out the legit example that he needed to set off, in order to balance this legit story.
Okay, I will get this straight (so you could understand me, and if you didn't, then we're on a different server.)
I give u example how this book like:
Real Event: 🙂😢💸😫😨😵💫😵💩☠️🪦💔
His Example: 🤓🤑💰
Hope you get it. He sets his examples without any of "WHAT IF?". Even Mathematics solution have an "IF", so do the stories you told. Yet your example didn't give any ifs
•This book is more teach you
Instead of
I get it.... not fucked up with your life means you didn't messed up your money. So they both come together. Yes yes yes i fucking get it, but girl this is not the one i wished for when i picked up this book.
What I thought when I picked up this book was that I would get the steps for "How to Deal with My Money." But I didn't get that "THE STEPS."
🐥
You know what irony is?
At the first, I'm going to say as my opening for this review, "This book is what I called short, but memorable." Believe me, I'm that girl who's ready to give it 5 stars.
BUT just after chapter 6, I think, "I SNAPPED!"
like, "snap-snap!"
All of the examples he sets for us sound like fiction to me, like when he did a rough calculation and served it right to the pages.
And I recalled almost throwing my book like, "What the hell?" It's exciting to read."
UNTIL...... It wasn't
God spoke to me, and he said, "You're wrong, my child." And I was like, "WTF I'm reading right now?!"
The author gave us a lot of examples after a very legit story, and of course with all of the "WISE
Me at early chapters:
"OMG, this man is amazing with his thoughts and his words."
But then I gave some thought to his thought, and then BOOM! It hits you differently.
It went from PERFECT
to HUH...??? HOLD ON FOR A SEC! 🤔
MY THOUGHTS:
•I love that this book is short, so it's easy to read, but instead it backfired. The author gave us a legit story from an actual event, but he left out the legit example that he needed to set off, in order to balance this legit story.
Okay, I will get this straight (so you could understand me, and if you didn't, then we're on a different server.)
I give u example how this book like:
Real Event: 🙂😢💸😫😨😵💫😵💩☠️🪦💔
His Example: 🤓🤑💰
Hope you get it. He sets his examples without any of "WHAT IF?". Even Mathematics solution have an "IF", so do the stories you told. Yet your example didn't give any ifs
•This book is more teach you
"HOW NOT FUCKED UP YOUR LIFE".
Instead of
"STEP TO NOT GET FUCKED UP YOUR LIFE BY ARRANGING YOUR MONEY IN THE WISE WAY".
I get it.... not fucked up with your life means you didn't messed up your money. So they both come together. Yes yes yes i fucking get it, but girl this is not the one i wished for when i picked up this book.
What I thought when I picked up this book was that I would get the steps for "How to Deal with My Money." But I didn't get that "THE STEPS."
🐥
April 1, 2021
I've read Housel's content for years and years. I can't recommend this book and its absurd density of insight enough. Don't let the title fool you: this book is just as much about designing a good life. For example, that a nice new car impresses yourself more than anyone else. On one of the first pages Morgan writes that "financial success is a soft skill, not a hard skill." That about sets the stage.
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