A few quick personal finance lessons from Morgan Housel’s ‘Psychology of Money’

Finance is no science. It involves the tiny actions and feelings of millions of people.

Finance writer Morgan Housel published a tidy book last year called the Psychology of Money that does a fine job communicating the concept. I quite liked it, so I’ve shared a few quick takeaways I got from the book. Consider buying your own copy.

Here’s a 2018 blog post he wrote honing the topic.

Here are a few notes:

  • “The hardest financial skill is getting the goal post to stop moving.”
  • Start early; Be patient “$81.5 billion of Warren Buffet’s $84.5 billion net worth came after his 65th birthday”
  • Be long term optimistic and short term paranoid
  • Investing is like the pilot quip: “The job is hours and hours of boredom punctuated by moments of sheer terror.” What do you do in crisis?
  • You can control your savings rate but you can’t control your investment gains. Focus on the first by humbly not needing a lot.
  • Invest reasonably not rationally (have investment you love and stick with them; always prioritize what helps you sleep at night)
  • View market volatility as a fee for returns over time, not a fine to be avoided or tricked, as few succeed doing.