SUMMARY OF PSYCHOLOGY OF MONEY BOOK
The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness
Author: Morgan Housel
Publisher: Harriman House
This is one of the books of money matters it contains the psychology of wealthy people. It discusses the investment strategies of Warren Buffet, Rajat Gupta and Bernie Madoff. It can be read by all age groups and it will provide them a sense to understand the behaviour and background of investors and traders on finance matters in general outlook.
I found some of the things very thought-provoking in this book what Rajat Gupta said after he released from prison. He suggested not to be attached to anything either with your reputation or with your accomplishment. He also suggested the things in which we should avoid to take risk in...
Freedom and independence
Family and friends
Author also talks about a brief history of why the US consumers think the way they do, for it he writes about post era of World War Two, how the US government dealt with the economy crisis when millions of young soldiers returned from war, how the US government dealt with the debt market, cheap credit cards, housing loans and a market that highly encouraged spending of all forms! The consequences of it lead to benefit everyone, as the economy grew synchronously for everyone but some of things have changed intensely afterwards, though the consumers’ attitude seem to have stuck through.
The author tries to elucidate by a mixture of psychology of wealthy people with some non-fiction events. It also contains behaviour of some rich people towards money. During explaining the concept of compounding the author talks about some old age events like world war two and compared old age events with the modern techniques of investment.
Some of the lessons in this book…
Receiving money requires taking risk, making big decisions, being optimistic about it and putting your mind out there for any ups and downs, similarly keeping money requires the opposite of taking any risk, making any big decisions. Though, it requires humility and fear of being taken away very fast than you dawdle your time to make it.
Money is greatest intrinsic value and this is not sensible to overstate it, so its ultimate goal is to give you control over your time if you dealt with it very well.
No one is a spread sheet or a data provider machine but one is a screwed up, an emotional person sometimes full of greed this is to be understood while making any decisions on finance.
It may sound trivial to you but when you think about market volatility as the fee rather than a fine then you realise that it is an important part of developing the kind of mind set that let you to stick for a long period of time to get investment profit and market work in your favour.
For someone to be pessimist is not just more common than to be optimist. It also sounds better. It is intellectually charming and it gains more attention rather to be optimist which is often viewed as being insensible to risk.
You may be a greedy, emotional person. You should trust your gut more than what your rational mind compel you to do. Invest in the products you find it relevant. Your rational mind might compel you to invest in stock market but it may not make you happy then you should go for other investment options.
There is very little difference between rich and wealthy one, you should focus on wealthy one. As rich people flash money while wealthy people save and invest money.
Sometimes we underestimate the power of frugality and saving. Though, we have an eager view for investing strategies. If one just tries to focus on being less extravagant then it can often have more compounding effect on long term on one’s wealth than a high return investment strategy.
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