Psychology of Money
The author has put forward 20 key features of the psychology of money and each
is backed by a reference from the history and a story around it. Unlike many
money management this book has no mathematical references.
The book has stressed enough on
- Compounding and long term
- Growth is driven by compounding and which always takes time.
- Tails drive everything
- One can be wrong half the time and still make a fortune
- Freedom & Saving money
- Controlling your time is the highest dividend money pays. That’s why more
people can and should save money.
- Always have the goal of independence; maximizing good sleep at
night.
- Kindness & Humility
- If respect and admiration are your goal, be careful how you seek it.
Humility, Kindness and empathy will bring you more respect than
horsepower ever will.
- Planning & room for error
- You have to plan on your plan not going according to plan.
- Everything has a price
- Treating volatility as a fee and not as a fine.
- Find the price, then pay it as nothing is free.
The chapter which I enjoyed more is actually a postscript, when numbered it will
be chapter 21. This runs through a brief history of why the US consumers think
the way they do. What is the USA’s past could be India’s present. Leveling out of
classes meant leveling out of lifestyles. Making poor spend more
and save less. Now with everyone on the Internet this leveling out lifestyle has
become more prominent.
My key takeaways from the book are
- Save before spend; It not only provides financial independence but also
provides an option to invest when opportunity is available.
- To see the power of compounding, dont disturb.
- Do not improve lifestyle with debt; do not discount the future.