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electrophon's reviews
67 reviews
The Psychology of Money: Timeless lessons on wealth, greed, and happiness by Morgan Housel
5.0
A helpful book
Today, I read Psychology of Money. There are lessons that I've learned in the book.
- The media likes to promote pessimism rather than optimism since it attracts more attention. Examples include stock prices going down when in the long term it will continue to increase.
- The economy will keep improving overtime, but there may be some temporary downfalls such as recession and inflation. The book discusses what happened post-WW2 and how lives have dramatically improved since then. Although the book does seem to implicitly suggest that the gap between the rich and poor is starting to increase.
- "85% of active mutual funds underperformed their benchmark over the 10 years ending 2018." The book suggest that investing in index fund is less risky than investing in mutual funds.
- There have been stories where investors have committed suicide due to losing all their wealth. While investing, you should be prepared to factor in risk.
- The most important factor in investing is time
There are more lessons in the book but I decided to bullet-point the most useful lessons.
More quotes from the book below:
"Half of all U.S. mutual fund portfolio managers do not invest a cent of their own money in their funds, according to Morningstar. This might seem atrocious, and surely the statistic uncovers some hypocrisy."
"Tell someone that everything will be great and they’re likely to either shrug you off or offer a skeptical eye. Tell someone they’re in danger and you have their undivided attention."
“Only 27% of college grads have a job related to their major, according to the Federal Reserve. Twenty-nine percent of stay-at-home parents have a college degree. Few likely regret their education, of course. But we should acknowledge that a new parent in their 30s may think about life goals in a way their 18-year-old self making career goals would never imagine."
Today, I read Psychology of Money. There are lessons that I've learned in the book.
- The media likes to promote pessimism rather than optimism since it attracts more attention. Examples include stock prices going down when in the long term it will continue to increase.
- The economy will keep improving overtime, but there may be some temporary downfalls such as recession and inflation. The book discusses what happened post-WW2 and how lives have dramatically improved since then. Although the book does seem to implicitly suggest that the gap between the rich and poor is starting to increase.
- "85% of active mutual funds underperformed their benchmark over the 10 years ending 2018." The book suggest that investing in index fund is less risky than investing in mutual funds.
- There have been stories where investors have committed suicide due to losing all their wealth. While investing, you should be prepared to factor in risk.
- The most important factor in investing is time
There are more lessons in the book but I decided to bullet-point the most useful lessons.
More quotes from the book below:
"Half of all U.S. mutual fund portfolio managers do not invest a cent of their own money in their funds, according to Morningstar. This might seem atrocious, and surely the statistic uncovers some hypocrisy."
"Tell someone that everything will be great and they’re likely to either shrug you off or offer a skeptical eye. Tell someone they’re in danger and you have their undivided attention."
“Only 27% of college grads have a job related to their major, according to the Federal Reserve. Twenty-nine percent of stay-at-home parents have a college degree. Few likely regret their education, of course. But we should acknowledge that a new parent in their 30s may think about life goals in a way their 18-year-old self making career goals would never imagine."