%% tags:: #writing/2024 #ProjectKnowledgeBase started_date::[[2024-03-10]] published:: project:: up:: ##### Research and idea capturing: - %% ###### [[Wealth]] | Updated [[2024-03-10]] # Psychology of Money by Morgan Housel 94 notes on Morgan Housel's Psychology of Money. Here are three 3 that resonate the most, and you might feel the same. —  I wrote this vibing to Money Trees by Kendrick Lamar, I suggest you do the same. Now let's continue. — > The premise of his book is that doing well with money has little to do with how smart you are and a lot to do with how you behave. Honestly, I wish engineering had taught me more about taxes and investing, and as we interview people as part of continuous discovery, or out of my curiosity for personal finances, the sentiment of "I didn't learn that in school" seems to be a constant. If you feel this way, pick up this book. > The hardest financial skill is getting the goalpost to stop moving. [...] It gets dangerous when the taste for more — more money, more power, more prestige — increases ambition faster than satisfaction. How do you define enough for your personal finances? It's a question I ask often during dinner tables with people in the industry. On the topic of curbing desires, there's a lot to learn from Epictetus, "Wealth consists not in having great possessions, but in having few wants." Social comparison, in my opinion, is the culprit and Roosevelt knew it when he said comparison is the thief of joy. > Warren Buffet is a phenomenal investor. But you miss the key point if you attach all of his success to investing acumen. The real key to his success is that he's been phenomenal for three quarters of a century. Buffet started investing at the age of 10 and 95% of his net worth was realized after his 50th birthday. It reminds me the rules of a Stanford class on Living an Asymmetric Life, "Do hard things, and do it for decades." Our human brain has a hard time to grasp the wonder of compounding. > Capitalism is hard. But part of the reason this happens is because getting money and keeping money are two different skills. Getting money requires taking risks, being optimistic, and putting yourself out there. Keeping money requires humility, and fear that what you've made can be taken away from you just as fast. So many "Get rich quick" schemes out there, never heard of a preserve money one. Reminds me of AK shouting "capitalism!" during GrowthMentor group pictures, absolute legend 😂 > The highest form of wealth is the ability to wake up every morning and say "I can do whatever I want to today." Happiness is subjective, but freedom seems to be a common denominator when people define financial success — and there's quite some research behind that. > Building wealth has little to do with your income or investment returns, and lots to do with your savings rate. For my quarterly portfolio review, the most important leading metric is my contribution rate. How much did I sacrifice now in the hopes of a better future? Whenever people ask me for financial advice, I tell them to set goals to move this metric. > In the real world, people do not want the mathematically optimal strategy. They want a strategy that maximizes for how well they want to sleep at night. This one hits home, part of my shift from individual stocks to ETFs has to do with peace of mind. It makes think about the "calculator strategy" that many financial players have. Assuming humans are emotional, not logical beings, what's the right positioning for financial tools? I got some experiments to run. > I am a passive investor optimistic in the world's ability to generate real economic growth and I'm confident that over the next 30 years that growth will accrue to my investments. I stand on the shoulders of this giant and make those words my investment philosophy. Financial success is not a hard science, it's a soft skill. Writing this from 4000 ft, on my way to Canada for Money.ca and Moneywise.com Product sessions. Money Trees is the perfect place for shading, that's just how I feel. As always, this is by no means financial advice, do you research then share it with me! PJ :) --- ## Comments Prefer video? Watch Ian's interview with Lenny (Xmin) >> Prefer a 5min read? Check the source here >> # Related to %% # LinkedIn post 94 notes on [Morgan Housel](https://www.linkedin.com/feed/#)'s Psychology of Money.  Here are three 3 quotes that resonate the most and why. — 𝐓𝐡𝐞 𝐡𝐚𝐫𝐝𝐞𝐬𝐭 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐬𝐤𝐢𝐥𝐥 𝐢𝐬 𝐠𝐞𝐭𝐭𝐢𝐧𝐠 𝐭𝐡𝐞 𝐠𝐨𝐚𝐥𝐩𝐨𝐬𝐭 𝐭𝐨 𝐬𝐭𝐨𝐩 𝐦𝐨𝐯𝐢𝐧𝐠. [...] 𝐈𝐭 𝐠𝐞𝐭𝐬 𝐝𝐚𝐧𝐠𝐞𝐫𝐨𝐮𝐬 𝐰𝐡𝐞𝐧 𝐭𝐡𝐞 𝐭𝐚𝐬𝐭𝐞 𝐟𝐨𝐫 𝐦𝐨𝐫𝐞 — 𝐦𝐨𝐫𝐞 𝐦𝐨𝐧𝐞𝐲, 𝐦𝐨𝐫𝐞 𝐩𝐨𝐰𝐞𝐫, 𝐦𝐨𝐫𝐞 𝐩𝐫𝐞𝐬𝐭𝐢𝐠𝐞 — 𝐢𝐧𝐜𝐫𝐞𝐚𝐬𝐞𝐬 𝐚𝐦𝐛𝐢𝐭𝐢𝐨𝐧 𝐟𝐚𝐬𝐭𝐞𝐫 𝐭𝐡𝐚𝐧 𝐬𝐚𝐭𝐢𝐬𝐟𝐚𝐜𝐭𝐢𝐨𝐧. Morgan takes us on a curbing desires debate. How much is "enough?" Lots to learn from the Stoics, "wealth consists not in having great possessions, but in having few wants," or "the problem is not how little we have, but that we’re constantly wanting more." — 𝐖𝐚𝐫𝐫𝐞𝐧 𝐁𝐮𝐟𝐟𝐞𝐭 𝐢𝐬 𝐚 𝐩𝐡𝐞𝐧𝐨𝐦𝐞𝐧𝐚𝐥 𝐢𝐧𝐯𝐞𝐬𝐭𝐨𝐫. 𝐁𝐮𝐭 𝐲𝐨𝐮 𝐦𝐢𝐬𝐬 𝐭𝐡𝐞 𝐤𝐞𝐲 𝐩𝐨𝐢𝐧𝐭 𝐢𝐟 𝐲𝐨𝐮 𝐚𝐭𝐭𝐚𝐜𝐡 𝐚𝐥𝐥 𝐨𝐟 𝐡𝐢𝐬 𝐬𝐮𝐜𝐜𝐞𝐬𝐬 𝐭𝐨 𝐢𝐧𝐯𝐞𝐬𝐭𝐢𝐧𝐠 𝐚𝐜𝐮𝐦𝐞𝐧. 𝐓𝐡𝐞 𝐫𝐞𝐚𝐥 𝐤𝐞𝐲 𝐭𝐨 𝐡𝐢𝐬 𝐬𝐮𝐜𝐜𝐞𝐬𝐬 𝐢𝐬 𝐭𝐡𝐚𝐭 𝐡𝐞'𝐬 𝐛𝐞𝐞𝐧 𝐩𝐡𝐞𝐧𝐨𝐦𝐞𝐧𝐚𝐥 𝐟𝐨𝐫 𝐭𝐡𝐫𝐞𝐞 𝐪𝐮𝐚𝐫𝐭𝐞𝐫𝐬 𝐨𝐟 𝐚 𝐜𝐞𝐧𝐭𝐮𝐫𝐲. Warren Buffett Accumulated 99% of his net worth after turning 50. The human brain has a hard time grasping the wonder of compounding. Do hard things, and do it for decades. Play long-term games with long-term people. — 𝐓𝐡𝐞 𝐡𝐢𝐠𝐡𝐞𝐬𝐭 𝐟𝐨𝐫𝐦 𝐨𝐟 𝐰𝐞𝐚𝐥𝐭𝐡 𝐢𝐬 𝐭𝐡𝐞 𝐚𝐛𝐢𝐥𝐢𝐭𝐲 𝐭𝐨 𝐰𝐚𝐤𝐞 𝐮𝐩 𝐞𝐯𝐞𝐫𝐲 𝐦𝐨𝐫𝐧𝐢𝐧𝐠 𝐚𝐧𝐝 𝐬𝐚𝐲 "𝐈 𝐜𝐚𝐧 𝐝𝐨 𝐰𝐡𝐚𝐭𝐞𝐯𝐞𝐫 𝐈 𝐰𝐚𝐧𝐭 𝐭𝐨 𝐭𝐨𝐝𝐚𝐲." Happiness is subjective, but freedom seems to be a common denominator when people define financial success — and there's quite some research behind that. Epictetus strikes again, "Freedom is the only worthy goal in life. It is won by disregarding things that lie beyond our control." — 𝐓𝐡𝐞 𝐩𝐫𝐞𝐦𝐢𝐬𝐞 𝐨𝐟 t𝐡𝐢𝐬 𝐛𝐨𝐨𝐤 𝐢𝐬 𝐭𝐡𝐚𝐭 𝐝𝐨𝐢𝐧𝐠 𝐰𝐞𝐥𝐥 𝐰𝐢𝐭𝐡 𝐦𝐨𝐧𝐞𝐲 𝐡𝐚𝐬 𝐥𝐢𝐭𝐭𝐥𝐞 𝐭𝐨 𝐝𝐨 𝐰𝐢𝐭𝐡 𝐡𝐨𝐰 𝐬𝐦𝐚𝐫𝐭 𝐲𝐨𝐮 𝐚𝐫𝐞 𝐚𝐧𝐝 𝐚 𝐥𝐨𝐭 𝐭𝐨 𝐝𝐨 𝐰𝐢𝐭𝐡 𝐡𝐨𝐰 𝐲𝐨𝐮 𝐛𝐞𝐡𝐚𝐯𝐞. I wish engineering had taught me more about investing. If you feel this way, pick up this book, a 4-hour audiobook, great for flights. PJ :)