Doing well with money has little to do with how smart you are and a lot to do with how you behave. And behavior is hard to teach.A genius who loses control of their emotions can be a financial disaster. The opposite is also true.

The Greatest Show on Earth.

Every job looks easy when you are not the one doing it.Market returns are never free and never will be. They demand you a price. But if you view the admission fee as a fine you'll never enjoy the magic.

Nothings Free

Building wealth has little to do with your income or investment returns and a lot with your saving rate.Wealth is just the accumulated leftovers after you spend what you take in.You don't need a specific reason to save.

Save Money

Aiming to be mostly reasonable works better than trying to be coldly rational. We are humans.Reasonable is more realistic and you have a better chance of sticking with it for the long run, which is what matters most when managing money.

Reasonable >> Rational

Stories are more powerful than statistics.There are many things in life that we think are true because we desperately want them to be true.Everyone has an incomplete view of the world. But we form a complete narrative to fill in the gaps.

When You'll Believe Anything

Long-term planning is harder than it seems because people's goals and desires change over time.Compounding works best when you can give a plan years or decades to grow.That is true for careers and relationships as well.

You'll Change

"Beware of taking financial cues from people playing a different game than you are."

You and Me

There is no reason to risk what you have and need for what you don't have and don't need.The hardest financial skill is getting the goalpost to stop moving. (Happiness = Results - Expectations)Social comparison is the problem here.The ceiling of social comparison is so high that virtually no one will ever hit it.

Never Enough

Lessons from one field can teach us something about unrelated fields.Take the billion-year history of ice ages, and the lesson about growing our money - "It is not necessarily the amount of snow that causes ice sheets but the snow, however little, lasts".It's about earning pretty good returns that you can stick with and which can be repeated for the longest period of time.That's when compounding runs wild.A small starting base can lead to results so extraordinary they seem to defy logic.

Confounding Compounding

"Enough" is not too little but it is realizing that an insatiable appetite for more will push you to the point of regret.There are many things never worth risking, no matter the potential gain:- Family & Friends- Reputation- Freedom- Being loved by those who you want to love you- Happinessall are invaluable. Keeping these things is knowing when it's time to stop taking risks.

When we see someone driving a luxury car, people rarely think, "Wow, the guy driving the car is cool."Instead, "Wow, if I had that car people would think I'm cool."No one is impressed with your possession as much as you're.

Man In The Car Paradox

Luck & Risk are siblings. They are both the reality that every outcome in life is guided by forces other than individual effort.Focus less on specific individuals and more on broad patterns. Nothing is as good or bad as it seems.

Luck & Risk

Our personal experiences with money are very little of what happened in the world and maybe 80% of how we think the world works.We all make decisions based on our own unique experiences that seem to make sense to us in a given moment.So no one is crazy.

No One's Crazy

The ability to do what you want, when you want, with whom you want, for as long as you want, is priceless.It is the highest dividend money pays.Reactance: Doing something you love on a schedule you can't control can feel the same as doing something you hate.

Freedom

Everything has a price, not all appear on labels.

History is the study of change, ironically used as the map of the future.We can't just make the decisions just by looking at history. Life is full of unexpected surprises.

Surprise

Optimism sounds like a sales pitch. Pessimism sounds like someone trying to help you.Pessimism is so seductive because it reduces expectations, narrowing the gap b/w possible outcomes and outcomes you feel great about.

Seduction of Pessimism

"Things that had never happened before happen all the time."

Good investing isn't about making good decisions it's about consistently not screwing up.The ability to stay around for a long time without wiping out or being forced to give up is what makes the biggest difference.

Getting Wealth v/s Staying Wealthy

The great investors bought vast quantities of art, a subset of the collections turned out to be great investments, and they were held for a long period of time to allow the portfolio return to converge upon the return of the best elements in the portfolio.It's not whether you're right or wrong that's important but how much money you make when you are right and how much you lose when you're wrong.Investing genius: A person who can do the average things when all those around them are going crazy.

Tails, You Win!

Spending money to show people how much money you have is the fastest way to have less money.Wealth is financial assets that haven't yet been converted into the stuff you see. It's income not spent.Rich is a current income.

Wealth is What You Don't See

The most important part of every plan is planning on your plan not going according to plan. The odds are in your favor when playing Rusian Roulette. But the downside is not worth the potential upside.

Room For Error

This book is one of the best books for the financial knowledge you'll read among the others. Get to know the real Psychology of Money by reading this.

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.

Understand yourself and those around you.

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Psychology

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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.

Morgan 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.

You and Me

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You & Me

Be patient and be consistent

Chess: Background