20 Wealth Lessons from “The Psychology of Money” by Morgan Housel 👇
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 & Risk
“Luck and risk are both the reality that every outcome in life is guided by forces other than individual effort. They are so similar that you can’t believe in one without equally respecting the other.
They both happen because the world is too complex to allow 100% of your actions to dictate 100% of your outcomes.”
3. Never Enough
“Life isn’t any fun without a sense of enough. Happiness, as it’s said, is just results minus expectations.”
4. Confounding Compounding
“If something compounds—if a little growth serves as the fuel for future growth—a small starting base can lead to results so extraordinary they seem to defy logic.
It can be so logic-defying that you underestimate what’s possible, where growth comes from, and what it can lead to.”
5. Getting Wealthy vs. Staying Wealthy
“There are a million ways to get wealthy … but there’s only one way to stay wealthy: some combination of frugality and paranoia.”
6. Tails, You Win
“A lot of things in business and investing work this way. Long tails—the farthest ends of a distribution of outcomes—have tremendous influence in finance, where a small number of events can account for the majority of outcomes.”
7. Freedom
“The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. It 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
“Spending money to show people how much money you have is the fastest way to have less money.”
10. Save Money
“Building wealth has little to do with your income or investment returns, and lots to do with your savings rate.”
11. Reasonable > 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 long run, which is what matters most when managing money.”
12. Surprise!
“The correct lesson to learn from surprises is that the world is surprising. Not that we should use past surprises as a guide to future boundaries; that we should use past surprises as an admission that we have no idea what might happen next.”
13. Room for Error
“Margin of safety—you can also call it room for error or redundancy—is the only effective way to safely navigate a world that is governed by odds, not certainties. And almost everything related to money exists in that kind of world.”
14. You’ll Change
“Long-term planning is harder than it seems because people’s goals and desires change over time.”
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
“Optimism sounds like a sales pitch. Pessimism sounds like someone trying to help you.”
18. When You’ll Believe Anything
“Stories are, by far, the most powerful force in the economy. They are the fuel that can let the tangible parts of the economy work or the brake that holds our capabilities back.”
19. The value of money
“Money's greatest intrinsic value—and this can't be overstated—is its ability to give you control over your time. 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. Watch your feelings
“Richard Feynman, the great physicist, once said, “Imagine how much harder physics would be if electrons had feelings.” Well, investors have feelings”
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