π Just finished reading - "Psychology of Money" by @morganhousel.
Highly recommend even if you are not heavily in finances and usually go for passive avenues.
Here's what I learnt in a distilled formπ
#PsychologyofMoney #BookReview
This book is a masterclass of the psychological factors that influence how people make decisions about their money. π€
It dives deep into the ways in which people's emotions and cognitive biases impact their financial behavior. π
Some key concepts include cognitive biases and heuristics, which are mental shortcuts that people use to make decisions about their money. π
It can lead people to make irrational decisions, such as overconfidence in their ability to predict future financial events. π¬
Doing well with money has a little to do with how smart you are and a lot to do with how you behave.
And behavior is hard to teach, even to really smart people. A genius who loses control of their emotions can be a financial disaster. π
The opposite is also true. π
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. π
"Black swans will occur no matter how ignorant you are of them."π
The learning here is simple: start saving and investing as early as possible.
Pick a couple of low-cost index funds and invest a small amount every month, keep increasing the contribution as your earn more, leave it for years and let compounding do its magic. β¨
Morgan suggests that a lack of understanding of compounding might have caused most disappointing trades, bad strategies, and successful investing attempts.
> Did you know that $81.5 billion of Warren Buffettβs $84.5 billion net worth came after his 65th birthday? π§
Many people want to look rich, but not many really want to be wealthy. There is a immense difference between the two.
> You can look rich, but be poorer than the homeless person down the street.
With that truth, is looking rich something to really aspire toβ
Morgan claims stopping the moving goalpost is the hardest but most crucial skill.
If expectations rise with results, there is no logic in striving for more. It gets dangerous when the taste of having more; more money/power; increases ambition faster than satisfaction. π
The highest dividend money pays is freedom to control your time. β³
Ultimate freedom is doing what you want, when you want, with who you want. Money can't buy happiness or health.
We often live our life like we have unlimited time till we do not.
At last, would like to end this thread with my favorite quote from the book, something for you to ponder upon:
"Saving is the difference between your ego and your income". π―
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