The Psychology of Money– Morgan Housel is a book to understand how your mind behaves when you have more money and when you are struggling with financial problems. This book will tell you how to do your financial planning and achieve the ultimate independence.
Main Key-Lessons from this Book
Different Choices of everyone- When it comes to financing, for some people the financial decision will make sense but not for others. While investing in the stock market in your early 20s makes totally sense but it may not be a good decision for others. Based upon their financial situations they will use the money for other decisions.
But whatever decision you take, it should be contributing to your financial independence (because that’s the end goal).
The Compounding Effect- When you start early to invest your money in stock, bonds, or any other assets. You get more benefit from others because you started early and you get a first-mover advantage. Like Warren Buffet did when he started from childhood. So, he’s more wealthy than others even if others are more skilled than him.
Getting Wealthy & Staying Wealthy- Getting wealthy is one part and staying wealthy is another part. When you get wealthy, there are chances that you can become more greedy. That’s the worst part. Greed is good but over greed can lose your everything. If your income increases, then you can increase your investments. So, make a rule for investing your money and follow that rule. And you will be wealthy by being disciplined.
But what actual wealth is?
Wealth is something you don’t see because while it’s not important, you don’t need to spend a lot of money on unnecessary things. Rich people buy things that make them feel good. But the wealth of wealthy people is hidden in the form of investments, retirement plans, and strong financial assets. Wealthy people also spend like rich ones but their wealth is much bigger, which we cannot see.
And to build great wealth you just need to invest your money and sit back and let your money compound. You will enjoy the returns after some years, that’ the amazing results of being patient.
Being Satisfied- Investing in a disciplined way and being patient is essential to get wealthy. Wanting more can make things riskier than what you have. So, don’t risk the things you have in pursuit of wanting more. If you don’t need more and when it’s not important then don’t take unmanageable risks. After all your family members, happiness and satisfaction are the most important.
Ignore other People’s opinions- When it comes to investing your money in stocks or any other bonds. Don’t follow experts’ advice because what they are telling might not be suitable for you. As they are addressing to everyone, not specifically for you. After hearing the experts analyze by yourself and ask, is it worth investing? Don’t follow the crowd instead play your own game by giving the right advice to yourself.
This book teaches you more amazing lessons than this. Great examples and behaviour of people towards money have been clearly explained in this book. I would recommend you to read this book if you want to build sustainable wealth.
Which other book would you recommend to review? Tell me in the comment section. Thank you for reading my article and Happy Reading!