The book "The Psychology of Money, by Morgan Housel" - Book Summary

Financial freedom is not rocket science, it is a soft skill, and where how you behave is more important than what you know. Spend some minutes on this blog and you will excel on this soft skill about money. I am going to explain the top 5 takeaways of The Psychology of Money, by Morgan Housel. And the author is a Swedish Investor, bring the best tips and tools for reaching financial freedom.

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Takeaway # 1: Pay the price

You are going to shop for buying a new nice watch and you selected the watch you like. You now have two options: either you can pay for it or steal it and run. Even if you have the physical capacity to steal it and run, you will pay for it. The point is that if you want a new watch, it comes with a price. Share investment will be volatile and have high returns in the stock market over the long term but it includes more risk on it. If there are no risks, no returns. We have to pay price for getting the best return.

Takeaway # 2: Never Enough

It is a very interesting point that if you have 1 billion rupees, you will be fine until you found a person with 1 billion and 1 rupees. Capitalism is good at two things: generating wealth and envy. The urge to surpass your neighbours, peers, and friends, can energize our hard work and doing meaningful work is more important. But social comparison can also cause us to feel like we are never enough. 

Takeaway # 3: Crazy is in the eye of the beholder.

Most of us spend the money in ridiculous amounts on ridiculous items, and others hide money under the bed. People come from different family backgrounds with different childhoods, different parents, different life experiences and different educations have different perspectives and values about money.   

Takeaway # 4: Peek-a-boo

World War II, the financial crises and covid-19 had huge impacts on the financial markets. They were impossible to foresee. We should prepare ourselves, both mentally and financially, for a disaster that we cannot foresee than hoping that you are able to react before everyone else.    

Takeaway # 5: The seduction of pessimism

Most of us tend to listen to pessimists more carefully, not only for evolutionary reasons but also because progress happens much slower than setbacks do. Progress is not happening overnight but setbacks will happen overnight, so it receives more attention.

Thanks for reading this blog and I genuinely hope these habits help you in improving your life. Best of luck with your successful life.

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