The Psychology of Money
Morgan Housel
“Wealth is about behaviour, not intelligence.”
The Psychology of Money
Morgan Housel · 2020
Morgan Housel is an American writer on finance and investing. He wrote for The Motley Fool and The Wall Street Journal, and became a partner at the venture capital firm Collaborative Fund. In 2020 he published The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness, which became an international bestseller.
Housel's central idea is that doing well with money has little to do with how smart you are and a lot to do with how you behave. He tells the story of Ronald Read, a janitor and petrol station worker in Vermont, who quietly saved and invested in shares for decades and left an estate of over eight million dollars. Meanwhile, some highly paid, well-educated people have gone bankrupt through overspending.
Housel points out that Warren Buffett's fortune is largely the result of investing for an extraordinarily long time; the great majority of his wealth came after his sixtieth birthday. Good investing is not about earning the highest returns, but about earning pretty good returns that you can stick with for the longest time. Patience is the hidden superpower.
One of the hardest financial skills is knowing when you have enough. Chasing more can lead people to risk what they already have. Housel says the highest dividend money pays is the ability to control your own time: to do what you want, when you want, with whom you want. He also advises leaving room for error: keep savings, avoid extreme debt, and plan for surprises, because the future rarely goes as expected.
Housel reminds us that wealth is often invisible. It is the car not bought, the money saved and invested. Spending to show off can make you look rich while becoming poorer. Save, even without a specific goal. Be reasonable rather than perfectly rational. Start today, stay patient, and let time build your freedom.