Learn more about moneyandinvestments with this collection
How to develop a healthy relationship with money
How to create a budget
The impact of emotions on financial decisions
Rich people do crazy things. Bernie Madoff had everything only to lose everything because he had no sense of enough. The lesson? There is no need to risk what you have and need for what you don’t have and don’t need.
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MORE IDEAS ON THIS
Long-term planning is harder than it seems because people’s goals and desires change over time.
We’re such poor forecasters of our future selves that there’s a term for this phenomenon: The End of History Illusion. We’re aware of how much we’ve changed in t...
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Our minds are not built to handle the reality that compounding leads to logic-defying results.
Warren Buffett’s fortune isn’t due to just being a good investor. Rather it’s due to being a good investor since he was a child. Simplifying we can say he then just waited.
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History is an unassailable guide to the future. A trap many investors fall the “historians as prophets” fallacy: an over-reliance on past data as a signal to future conditions in a field where innovation and change are the lifeblood of progress. Past performance is not indicative...
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Everything has a price, but not all prices appear on labels.
The price of investing success is not immediately obvious. It’s not a price tag you can see, so when the bill comes due, it doesn’t feel like a fee for getting something good. It feels like a fee for doing somethi...
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6.34K reads
You can be wrong half the time and still make a fortune.
Anything that is huge, profitable, famous, or influential is the result of a tail event, an outlying one-in-thousands or millions event.
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10.9K reads
Everyone looks at money through the lens of their past experiences.
You can read what it was like to lose everything during, say, The Great Recession, but you will never bear the emotional scars of those who survived it and are now afraid to invest again. It’s impo...
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Spending money to show people how much money you have is the fastest way to have less money.
We tend to judge wealth by what we see because that’s the information we have in front of us. But the truth is that wealth is what you don’t see. Rich is a current income. Nice cars...
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8.76K reads
Building wealth has little to do with your income or investment returns and more to do with your savings rate. The value of wealth is relative to what you need. A high savings rate means having lower expenses than you otherwise could, and having lower expenses means your savings ...
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8.09K reads
No one is impressed with your possessions as much as you are.
People tend to want wealth to signal to others that they want to be liked and admired. But in reality, those other people often bypass admiring you, not because they don’t think wealth is admirable, but because t...
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Optimism sounds like a sales pitch. Pessimism sounds like someone trying to help you.
In finance, pessimism is paid more attention than optimism and is, therefore, more persuasive. “It’s easier to create a narrative around pessimism because the story pieces tend to be f...
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6.03K reads
Stories trump statistics. The more you want something to be true, the more likely you are going to believe a story that overestimates the odds of it being true.
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Controlling your time is the highest dividend money pays. The highest form of wealth is the ability to wake up every morning and say, “I can do whatever I want, when I want, with who I want, for as long as I want.” This is the highest dividend money pays:
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Doing well with money is not necessarily about what you know, but about how you behave. Is what Morgan Housel explores in his popular book, where he shares 19 stories that explore the behavioral aspects of personal finance.
To Note:
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Aiming to be mostly reasonable works better than trying to be coldly rational.
“Do not aim to be coldly rational when making financial decisions. Aim to just be pretty reasonable. Reasonable is more realistic, and you have a better chance of sticking with it for the lon...
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8.74K reads
Nothing is as good or as bad as it seems. Every outcome in life is guided by forces other than individual effort. Bill Gates had a competitive advantage over millions of other students because he attended one of the only high schools in the world that had the cash and foresig...
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22.4K reads
Avoid taking financial cues from people playing a different game than you are.
Few things matter more with money than understanding your own time horizon and not being persuaded by the actions & behaviors of people playing different games than you are. Go out of your way to...
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6.31K reads
The most important part of every plan is planning on your plan, not going according to plan.
Have room for error when estimating your future returns. For his own investments, Housel assumes the future returns he’ll earn in his lifetime will be ⅓ lower than the historic aver...
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6.84K reads
Good investing is not about making good decisions. It’s about consistently not screwing up. There are a million ways to get wealthy. The only way to stay wealthy is some combination of frugality and paranoia.
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CURATED FROM
IDEAS CURATED BY
Total food specialist. Friendly webaholic. Coffee fan. Proud analyst. Tv expert. Explorer. Travel nerd. Incurable beer advocate.
The Psychology of Money is a collection of short stories exploring the strange ways people think about money and teaches you how to make better sense of it.
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Other curated ideas on this topic:
You get down on yourself and question why you aren’t where you want to be.
To help you overcome procrastination, don’t compare yourself to others. Get clear on your goals and stay on your own path.
Celebrate every success you have and step back and express gratitude for wh...
Apply the "good enough" standard to yourself. You don’t have to be perfect. You just need to be good enough. Setting unrealistically high standards prevents you from trying because of the fear of not meeting the unreasonable expectations.
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