The Psychology Of Money

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

I finished reading the first book of 2021. I should say I finished listening to. This was the first-ever audio book experience for me.

The book that I completed was The Psychology of Money by Morgan Housel. 

The book attempts to explain that dealing with money or investment is not a hard skill that you can master by mastering the numbers and statistics. Rather, it is a soft skill. The author goes about providing various examples throughout the book that shows how humans are complex beings and how the investment decisions are made not based on data but on emotions. 

The author also emphasizes the power of compounding – how it is important to start early and play the game longer. Warren Buffet’s success with investing is because he started when he was 11 and he has been playing the game for more than seven decades now.  

Morgan warns the readers about greed and pessimism and how the media are biased towards pessimism. 

The book has a lot of contemporary and historical examples from the US. However, the point being driven is psychological and philosophical which is universally applicable. Overall, a good book and a refreshing read. I would recommend this book. 

Following are some of the lines that I liked from this book:

“progress happens too slowly to notice, but setbacks happen too quickly to ignore.” 

“The customer is always right” and “customers don’t know what they want” are both accepted business wisdom. The line between “inspiringly bold” and “foolishly reckless” can be a millimeter thick and only visible with hindsight.” 

“Spending money to show people how much money you have is the fastest way to have less money.” 

“Use money to gain control over your time, because not having control of your time is such a powerful and universal drag on happiness. The ability to do what you want, when you want, with who you want, for as long as you want to, pays the highest dividend that exists in finance.” 

“Saving is the gap between your ego and your income.” 

“A wise old owl lived in an oak,

The more he saw the less he spoke,

The less he spoke, the more he heard,

Why aren’t we all like that wise old bird?”