Thread by @SquareoffIn

⚡️Timeless lessons from the book The Psychology of Money

Financial success is not a hard science. It’s a soft skill, where how you behave is more important than what you know.

We will talk about some of the most important lessons from the book.

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1⃣ No one’s crazy!

Young households in the 1980’s were less likely to invest in the stock market in response to the poor market returns of the 1970’s.

As a result these young adults missed one of the best times to invest, The S&P 500 returned an average of 14.9% from 1980-1990

Young households in the late 1990’s were more likely to hold a high percentage of their net worth in the stock market.

They were informed by a hot market in the 80’s and 90’s. Many of them piled into stocks right before the dot com crash, and they lost decade during the 2000’s.

2⃣ Is success a result of skill or luck?

Well, generally if you succeed, you would consider it a by-product of your skills, but if you lose, will consider it as a result of luck.

The truth is any financial failure or success is a result of the combination of luck and skills.

Luck and risk are both the reality that every outcome in life is guided by forces other than individual effort.

They both happen because the world is too complex to allow 100% of your actions to dictate 100% of your outcomes.

3⃣ Learn to say this is Enough

As humans we have this unending need of wanting more and more, and to keep moving our goal posts. When we reach a certain level, we want to reach the next level as soon as possible.

But this won’t fare good at least in the case of money! Somewhere you’ve got to say this is enough!

Morgen says that “Enough is not too little … ‘Enough’ is realizing that the opposite—an insatiable appetite for more—will push you to the point of regret.”

4⃣ Appreciate the magic of compounding

On 59th birthday, Warren Buffett’s net worth was only $3.8 US Billion.

In 6 years, his wealth multiplied 4 times!

In 12 years, his wealth multiplied 9 times!!

In 18 years, his wealth multiplied 15 times!!!

At the age of 91 his net worth is $87.5 billion. So, his wealth has multiplied by 22 times in the last 32 years!!!!

Because he started early! He started investing at the age of 10 and till the time he was 30 he had amassed wealth of $1 million.

5⃣ Getting wealthy is different from staying wealthy!

Getting more money requires taking risks, being optimistic, and putting yourself out there.

But keeping money requires humility & fear that what you’ve made can be taken away from you just as fast.

6⃣ Don’t be a flashy twat!

You might think you want an expensive watch, a fancy watch, and a huge house, but I'm telling you, you don’t.

What you want is respect and admiration from other people, and you think having expensive stuff will bring it, it almost never does.

Remember “No one is impressed with your possessions as much as you are.”

If respect and admiration are your goal, be careful how you seek it.

Humility, kindness, and empathy will bring you more respect than horsepower ever will.

7⃣ Use money to buy freedom

Money’s greatest intrinsic value and this can’t be overstated - is its ability to give you control over your time.

Using your money to buy time and options has the lifestyle benefit few luxury goods can compete with.

More than your salary. More than the size of your house. More than the prestige of your job.

Control over doing what you want, when you want to, with the people you want to, is the broadest lifestyle variable that makes people happy.

Shared by finkarma.in

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