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Nine Lessons from Morgan Housel
Morgan Housel is a partner at Collaborative Fund and the author of one of the 21st century's most influential books about money.
His first book, the Psychology of Money, recently surpassed 3 million copies sold worldwide.
Here are nine lessons from Housel's book.
- "Money’s greatest intrinsic value, and this can’t be overstated, is its ability to give you control over your time:.
Using money as a key to freedom over your time is something few goods can compete with.
- "When you define savings as the gap between your ego and your income you realize why many people with decent incomes save so little".
On the road to wealth, the savings rate is more important than the income level.
- “History never repeats itself; man always does".
If you can understand how human's emotions are tied to money, you can understand why history seems to repeat itself so often.
- "If you give luck and risk their proper respect, you realize that when judging people’s financial success, both your own and others’, it’s never as good or as bad as it seems".
Be humble enough to realise when luck is on your side.
- "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".
Avoid relying too heavily on things that have worked or failed in the past.
- "The further back in history you look, the more general your takeaways should be".
The further back into the past we look, the more likely it is that it reflects a world entirely different to the one we are in today.
- When a commentator on CNBC says, “You should buy this stock,” keep in mind that they do not know who you are".
Understand that everyone is playing a different game.
- "Capitalism is hard. But part of the reason this happens is because getting money and keeping money are two different skills".
It requires two different mindsets to accumulate wealth and keep it.
- “Judging how you've done by focusing on individual investments makes winners look more brilliant than they were, and losers appear more regrettable than they should”.
You can be wrong half the time and still make a fortune. Learn to become comfortable being wrong.
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