The Psychology of Money
This is a book about investment and finance. The unique thing about this book is that it is from the perspective of psychology. A lot of ideas are very intuitive and common sense, but always ignored by us. Therefore, a few notes are listed below:
- Time is the only important ingredient in compounding.
- A good investment is earning good returns and repeating for a long time.
- Luck is mostly neglected since we want to take credit and our brains prefer simpler black and white answers.
- Using money to buy time and options has lifestyle benefits few luxury goods can provide.
- Spending money to show people how much money we have is the quickest way to lose money.
- Buying expensive things to gain respect and admiration never works. Humility, kindness, and empathy bring more respect and admiration.
- Risk is what’s left over when we think we’ve thought of everything.
- Anything that is huge, profitable, famous, influential is most likely a result of a tail event.
- The way to be rich is to spend judiciously the money we have and never spend the money we don’t have. It’s hard and requires self-control.
- Good decisions aren’t always rational. At some point,j we’ve to choose between being happy and being right.
- We suggest what makes sense but do what feels right.
- Beating the market should be hard. If it wasn’t everyone would do it and if everyone did it then there would be no opportunity.
Ok, to summary, this book is trying to tell us the right attitude towards money and investment:
- Buy & hold
- Diversify the risk and be humble toward the markets
- Save money and invest it
- The importance of maintaining good health and ensuring adequate rest, pivotal for long-term success and well-being
And there is also one youtube video (in Chinese) which explain the investment mindset very well: 投资第一课
知行合一，希望自己不要再冲meme coins.