18 Wealth Lessons from “The Psychology of Money”
📚 Book Review (Thread)
📚 Book Review (Thread)
1⃣ 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.”
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“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.”
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“Every decision people make with money is justified
by taking the information they have at the moment and
plugging it into their unique mental model of how the
world works.”
by taking the information they have at the moment and
plugging it into their unique mental model of how the
world works.”
2⃣ Luck & Risk
“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.”
“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 Never Enough
“Life isn’t any fun without a sense of enough.
Happiness, as it’s said, is just results minus
expectations.”
✅ Enough’ is not too little … ‘Enough’ is realizing that
the opposite, an insatiable appetite for more, will push
you, to the point of regret.
“Life isn’t any fun without a sense of enough.
Happiness, as it’s said, is just results minus
expectations.”
✅ 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 Confounding Compounding
“If something compounds is 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.
“If something compounds is 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.
5⃣ 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.”
✅ Good investing is not necessarily about making
good decisions. It’s about consistently not screwing
up.
“There are a million ways to get wealthy, but there’s
only one way to stay wealthy: some combination of
frugality and paranoia.”
✅ Good investing is not necessarily about making
good decisions. It’s about consistently not screwing
up.
6⃣ 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 some events can account for the majority of
outcomes.“
“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 some events can account for the majority of
outcomes.“
7⃣ Freedom
“The ability to do what you want, when you want, with
whom you want, for as long as you want, is priceless.
It is the highest dividend money pays.“
✅ The highest form of wealth is the ability to wake
up every morning and say, ‘I can do whatever I want
today.
“The ability to do what you want, when you want, with
whom you want, for as long as you want, is priceless.
It is the highest dividend money pays.“
✅ The highest form of wealth is the ability to wake
up every morning and say, ‘I can do whatever I want
today.
8⃣ Man in the Car Paradox
“No one is impressed with your possessions as much
as you are.”
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“No one is impressed with your possessions as much
as you are.”
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People tend to want wealth to signal to others that
they should be admired. But in reality, those other
people often bypass admiring you, not because
they don’t think wealth is admirable, but because they
use your wealth as a benchmark for their own desire
to be admired.
they should be admired. But in reality, those other
people often bypass admiring you, not because
they don’t think wealth is admirable, but because they
use your wealth as a benchmark for their own desire
to be admired.
9⃣ 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.”
“Spending money to show people how much money
you have is the fastest way to have less money.”
🔟 Save Money
“Building wealth has little to do with your income or
investment returns, and lots to do with your savings
rate.”
✅ Independence, at any income level, is driven by your savings rate.
“Building wealth has little to do with your income or
investment returns, and lots to do with your savings
rate.”
✅ Independence, at any income level, is driven by your savings rate.
1⃣1⃣ 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.”
“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.”
1⃣2⃣ 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.”
“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.”
1⃣3⃣ 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.”
“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.”
1⃣4⃣ You’ll Change
“Long-term planning is harder than it seems because
people’s goals and desires change over time.”
“Long-term planning is harder than it seems because
people’s goals and desires change over time.”
1⃣5⃣ Nothing’s Free
“Everything has a price, but not all prices appear on
labels.”
❗️ Problem is that the price of a lot of things is not obvious until you’ve experienced them firsthand, when the bill is overdue.
“Everything has a price, but not all prices appear on
labels.”
❗️ Problem is that the price of a lot of things is not obvious until you’ve experienced them firsthand, when the bill is overdue.
1⃣6⃣ You & Me
“Beware taking financial cues from people playing a
different game than you are.”
❗️ It’s the notion that assets have one rational price in
a world where investors have different goals and time
horizons.
“Beware taking financial cues from people playing a
different game than you are.”
❗️ It’s the notion that assets have one rational price in
a world where investors have different goals and time
horizons.
1⃣7⃣ The Seduction of Pessimism
“Optimism sounds like a sales pitch. Pessimism
sounds like someone trying to help you.”
✅ Optimism is a belief that the odds of a good
outcome are in your favor over time, even when there
will be setbacks along the way.
“Optimism sounds like a sales pitch. Pessimism
sounds like someone trying to help you.”
✅ Optimism is a belief that the odds of a good
outcome are in your favor over time, even when there
will be setbacks along the way.
1⃣8⃣ 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.”
“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.”
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