Hello folks, and welcome to readinghabit.net. This time I'll go over the nine lessons I took away from this book. This book is one of my favourites. I took a lot of money lessons, especially about investing. This is the second time I've written about this book. When I started readinghabit.net a year ago, it was my first book blog. There are a lot of memories from this book. I decided to rewrite it with extra information.
Author's description: Mr Morgan is a blogger and writer you can find his blog on collaborativefund.com where he writes about investment. Before this book, he had written two more books called 50 Years in the Making (2011) & Everyone Believes It (2012). Let's talk about this book. What can I say about this book? It teaches you a lot about money and investing Morgan went through its roots while describing money. It became one of the international bestselling books.
1) No one's crazy "Your personal experiences with money makeup maybe 0.00000001% of what's happened in the world but maybe 80% of how you think the world works"
We all do crazy stuff with money because we're all relatively new to this game & what looks crazy to you might make sense to me. But no one is crazy- we all make decisions based on our own unique experiences that seem to make sense to us in a given moment.
Conclusion: In this chapter, the author wishes to discuss money and how different people behave in financial situations. As a result, because everyone has a history of their living habits or time, no one knows about money experiences. As a result, people act in accordance with their financial circumstances. If you were born into poverty, you will not take financial risks because saving is more important. For example, if I tell my father that I want to invest in the stock market, he will tell me that it's a crazy idea because he considers it a gamble. So no one is insane when it comes to money; everyone has a background and should respect their decision.
2) Luck & Risk
"Luck and risk are siblings, they are both the reality that every outcome in life is guided by forces other than individual effort."
Failure can be a lousy teacher because it seduces smart people into thinking their decisions were terrible when sometimes they just reflect the unforgiving realities of risk. The trick when dealing with failure is arranging your financial life in a way that a bad investment here & a missed financial goal there won't wipe you out so you can keep playing until the odds fall in your favour.
Conclusion: Luck & risk are like two sides of the same coin. We see a successful person. We pronounce that word correctly. He is extremely fortunate, but we don't know how much risk he has taken. A successful person understands that whenever he creates a chance, he must always take a risk, and as a result, he always plans to manage the risk. So create your luck but also plan your risk in your life.
3. Never Enough
"There is no reason to risk what you have and need for what you don’t have and don’t need."
To make money they didn't have & didn't need, they risked what they did have & did need. And that's foolish. It is just plain foolish. If you risk something that is important to your for something that is unimportant to you, it just does not make any sense.
The hardest financial skill is getting the goalpost to stop moving
Social comparison is the problem here.
Enough is not too little.
There are many things never worth risking, no matter what the potential gain.
Conclusion: Maintaining a lifestyle below what you can afford is avoiding risk in your life. When you have enough in your life, then you should stop taking risks because, at the time, you will probably do something that will damage your reputation.
4. Confounding Compounding
"If something compounds-if a little growth serves as the fuel for future growth"
Good investing isn’t necessarily about earning the highest returns. Good investing is about earning pretty good returns that you can stick with, and which can be repeated for the longest period of time. That is when compounding runs wild.
Conclusion: Here the author talks about compounding. He says that compounding is the best tool for further growth. He points to the fascinating fact that $81.5 billion of Warren Buffett’s $84.5 billion net worth came after his 65th birthday. I must say, compounding doesn't work only in investing, but it helps in real life as well. Always think that compounding will pay you a good dividend.
5. Getting wealthy vs staying wealthy
" Good investing is not necessarily about making good decisions. It's about consistently not screwing up."
Applying the survival mindset to the real world comes down to appreciating three things.
More than I want big returns, I want to be financially unbreakable. And if I’m unbreakable I actually think I’ll get the biggest returns, because I’ll
Planning is important, but the most important part of every plan is to plan on the plan not going according to plan.
A barbelled personality—optimistic about the future, but paranoid about what will prevent you from getting to the future—is vital.
Conclusion: The most important aspect of the investment is not how you become wealthy, but how you maintain your wealth. The most important aspect of the investment is remaining wealthy. Invest in such things only if the volatility is low. You may make money in the short term, but you will almost certainly lose it in the long run.
“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 who you want, for long as you want, is priceless. It is the highest dividend money pays.
Conclusion: This is one of my favourite chapters because it discusses how to build wealth so that you can control your time and spend your life the way you want. You don't need to be concerned about the future. To me, it's all about independence. That does not imply that you will stop working. It means you only do the work you want to do with the people you want to work with at the times you want for as long as you want. Maintain a financial goal in mind at all times so that you can enjoy your time. Don't we all want a life like this? We need to get ready for this. I don't believe we need to become wealthy in order to stay here. It is sufficient to maintain one's wealth. To conclude, I'd like to quote the author: "Controlling your time is the highest dividend money pays."
7. 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"
The truth is that wealth is what you don’t see. Wealth is the nice cars not purchased. The diamonds were not bought. The watches not worn, the clothes were forgone and the first-class upgrade declined. Wealth is financial assets that haven’t yet been converted into the stuff you see.
Conclusion: Don't be materialistic in your life; you'll have less money that way. Spending money to impress someone is the biggest mistake you'll ever make in your life. If someone can afford such things, it does not imply that they are wealthy. He may have taken out a loan, or he may be able to afford such things. Wealth is the option to buy something later that has not yet been exercised. Its value is in giving you the options, flexibility, and growth to one day be able to buy more stuff than you can now.
8. Room for Error
"The most important part of every plan is planning on your plan not going according to plan"
Room for error does more than just widen the target around what you think might happen. It also helps protect you from things you'd never imagine, which can be the most troublesome events we face.
Conclusion: If I say just in simple words, there should be a backup plan for your investment. Always have a margin of safety in your investment, no matter where you invest. so make every planning on your plan not going according to plan.
9. YOU & ME
"Beware taking financial cues from people playing a different game than you are"
Few things matter more with money than understanding your own time horizon and not being persuaded by the actions and behaviours of people playing differently.
Conclusion: People frequently accept cues from others without even realising them. That's a big blunder. Recognize your investment approaches. Play your own game and don't worry about what other people are doing or how they are investing their money. When it comes to investing in stocks or cryptocurrency, I see people who blindly follow the suggestions. This is the biggest blunder you'll ever make. First, figure out what you want to achieve and then develop strategies in order to achieve it.
My thoughts on this book: You will not achieve anything in life if you do not value money. The most important life lesson is to learn and appreciate the value of money, and this book will show you how. We all make mistakes when it comes to our financial planning. This is a lovely book that explains the significance of money in our lives. Morgan Housel has written an excellent book in which he teaches you all you need to know about money and investment. Before starting their investing path, those in their twenties should read this book at least once.
Thanks, the flock's reading to the Sharath Bangera blogs, readinghabit.net! I hope you love this blog. I have been a reader for a long time, which led me to start a blog about online book bloggers in India. I chose to go through the best-selected books for enthusiastic readers and started my review line, known as, "online book review by Sharath Bangera."