*********Personal summary of “The Psychology of Money: Timeless Lessons on Wealth, Greed and Happiness” (Part 1)*********

I made a resolution to start reading books again recently (I leaned more on online articles in the last year). ‘The Psychology of Money: Timeless Lessons on Wealth, Greed and Happiness’ is the second book I have read since I made that resolution.

I finished the book approximately two weeks ago and decided to summarise the book in my own words for two reasons. Firstly, in order to challenge my brain to recall the various principles I learnt so that they stick better. You know it’s possible to read a book and a few months down the line, you realise you can barely recall anything from it. Secondly, some of us might not be able to read the book for various reasons, so a summary is a good way to get a hang of the book and learn from it as well.

Before I proceed with the summary, I have to give a big shout out to the author, Morgan Housel. Though he seems a bit traditional with some of his investment choices, the principles he dished out in the book are timeless and can apply to various areas of our lives; not necessarily our finances alone.

I will be summarising the book chapter by chapter. Although the book has twenty chapters, the last two are the author’s summary and personal confessions. I will hence, be focusing on the first eighteen. This summary will be split into two parts of nine chapters each. This article will cover the first nine chapters. The summary of each chapter will be short. It is key to remember that they are mostly in my own words, after reading the book just once.


Chapter 1 (No One’s Crazy):
People do crazy things with money, but no one is crazy. As at the time an individual took that financial decision that seems crazy to you, it made perfect sense to them. We all face different circumstances that make what we do with our money seem like the most rational thing in the world.

For example, poor people tend to spend a larger percentage of their income on lottery tickets as opposed to rich people, which leads to them losing a good portion of their already meagre income. That’s crazy, but it makes sense to a poor person who views lottery as their best bet to making a large amount of money in the shortest time possible.


Chapter 2 (Luck & Risk):
A good portion of success is influenced by luck (or grace like I call it) and a good portion of failure is influenced by risk (you can think of it as ill luck). The world is a very complex place, where a lot of things happen outside your control, so it’s impossible for you to be solely responsible for how you end up.

This can help you develop empathy for yourself and others when things don’t turn out very well. It can also give you some level of humility knowing that the success you have is not down to you entirely.

I particularly liked how the author analysed how the odds of Bill Gates being in a high school that was gifted a computer in the 1960s played a huge role in how he turned out. His high school was one of the very few that had a computer in the U.S at the time, let alone in the world. Without that early exposure to computers, the Bill Gates we know today might have never been.


Chapter 3 (Never Enough):
It’s not wise to use what you have and need to try and get what you don’t have and don’t need. You need to keep your ego and your greed in check so that you don’t take on unnecessary financial risk that can lead to your ruin. If you always jump on every money making avenue that comes your way, you might not last very long in the game.

A valid reason why many people always feel that they don’t have enough is because they keep comparing themselves to others. For instance, investment bankers on Wall Street who earn a million dollars every year (which is way more than what most people on the planet earn), might feel like they are poor when they compare themselves to those around them raking in a billion dollars annually.

To be fair, there will always be someone who is richer than you, so recognize when you have enough at a particular time and be content.


Chapter 4 (Confounding Compounding):
Compound Interest should be the eighth wonder of the world. Due to the way our brains work, it is very easy to underestimate the power of exponentiality. Most assets tend to rise significantly over time, so if you are patient enough to hold onto your investments for a long period of time and let compound interest do its thing, the results would be mind blowing.

The author gave an example of how Warren Buffet made most of his money after he turned 65. He held onto his investment for decades (through the recessions and economic turmoil), and it wasn’t until later that the compound interest started to really show. Mastery of time and Patience are virtues that should never be underestimated in investing.


Chapter 5 (Getting Wealthy vs Staying Wealthy):
Getting wealthy is hard, but staying wealthy is where the real difficulty lies. After attaining wealth, it’s easy to feel invincible and............................................

You can read the full article here:

https://taiosquare.medium.com/personal-summary-of-the-psychology-of-money-timeless-lessons-on-wealth-greed-and-happiness-47bdaf3d6c50

This is a very good book on investment ! Thank you for sharing your lessons

Aol360:
This is a very good book on investment ! Thank you for sharing your lessons

Thanks

recommendations:
Personal summary of “The Psychology of Money: Timeless Lessons on Wealth, Greed and Happiness” (Part 1)

I made a resolution to start reading books again recently (I leaned more on online articles in the last year). ‘The Psychology of Money: Timeless Lessons on Wealth, Greed and Happiness’ is the second book I have read since I made that resolution.

I finished the book approximately two weeks ago and decided to summarise the book in my own words for two reasons. Firstly, in order to challenge my brain to recall the various principles I learnt so that they stick better. You know it’s possible to read a book and a few months down the line, you realise you can barely recall anything from it. Secondly, some of us might not be able to read the book for various reasons, so a summary is a good way to get a hang of the book and learn from it as well.

Before I proceed with the summary, I have to give a big shout out to the author, Morgan Housel. Though he seems a bit traditional with some of his investment choices, the principles he dished out in the book are timeless and can apply to various areas of our lives; not necessarily our finances alone.

I will be summarising the book chapter by chapter. Although the book has twenty chapters, the last two are the author’s summary and personal confessions. I will hence, be focusing on the first eighteen. This summary will be split into two parts of nine chapters each. This article will cover the first nine chapters. The summary of each chapter will be short. It is key to remember that they are mostly in my own words, after reading the book just once.


Chapter 1 (No One’s Crazy):
People do crazy things with money, but no one is crazy. As at the time an individual took that financial decision that seems crazy to you, it made perfect sense to them. We all face different circumstances that make what we do with our money seem like the most rational thing in the world.

For example, poor people tend to spend a larger percentage of their income on lottery tickets as opposed to rich people, which leads to them losing a good portion of their already meagre income. That’s crazy, but it makes sense to a poor person who views lottery as their best bet to making a large amount of money in the shortest time possible.


Chapter 2 (Luck & Risk):
A good portion of success is influenced by luck (or grace like I call it) and a good portion of failure is influenced by risk (you can think of it as ill luck). The world is a very complex place, where a lot of things happen outside your control, so it’s impossible for you to be solely responsible for how you end up.

This can help you develop empathy for yourself and others when things don’t turn out very well. It can also give you some level of humility knowing that the success you have is not down to you entirely.

I particularly liked how the author analysed how the odds of Bill Gates being in a high school that was gifted a computer in the 1960s played a huge role in how he turned out. His high school was one of the very few that had a computer in the U.S at the time, let alone in the world. Without that early exposure to computers, the Bill Gates we know today might have never been.


Chapter 3 (Never Enough):
It’s not wise to use what you have and need to try and get what you don’t have and don’t need. You need to keep your ego and your greed in check so that you don’t take on unnecessary financial risk that can lead to your ruin. If you always jump on every money making avenue that comes your way, you might not last very long in the game.

A valid reason why many people always feel that they don’t have enough is because they keep comparing themselves to others. For instance, investment bankers on Wall Street who earn a million dollars every year (which is way more than what most people on the planet earn), might feel like they are poor when they compare themselves to those around them raking in a billion dollars annually.

To be fair, there will always be someone who is richer than you, so recognize when you have enough at a particular time and be content.


Chapter 4 (Confounding Compounding):
Compound Interest should be the eighth wonder of the world. Due to the way our brains work, it is very easy to underestimate the power of exponentiality. Most assets tend to rise significantly over time, so if you are patient enough to hold onto your investments for a long period of time and let compound interest do its thing, the results would be mind blowing.

The author gave an example of how Warren Buffet made most of his money after he turned 65. He held onto his investment for decades (through the recessions and economic turmoil), and it wasn’t until later that the compound interest started to really show. Mastery of time and Patience are virtues that should never be underestimated in investing.

Chapter 5 (Getting Wealthy vs Staying Wealthy):
Getting wealthy is hard, but staying wealthy is where the real difficulty lies. After attaining wealth, it’s easy to feel invincible and............................................

You can read the full article here:

https://taiosquare.medium.com/personal-summary-of-the-psychology-of-money-timeless-lessons-on-wealth-greed-and-happiness-47bdaf3d6c50

Thanks man.

Observer20:


Thanks man.

You are welcome.

....