Book review #One of 2021: The Psychology of Money

Why I feel very wealthy and successful after reading this book and hopefully stay.

The Psychology of Money by Morgan Housel is a very interesting read and a must recommend for all people for understanding and managing personal finance.   The book is easy to read and structured into small chapters talking about each topic. It explains some of the basics of personal finance which though well-known are not implemented.

There are many interesting topics like the importance of staying wealthy, the power of compounding, the Role of luck, Role of unknows etc.  However, the most important topic which struck a chord with me was the importance of Wealth as a source of independence. 

The Author says- The highest form of Wealth is the ability to Wake up every morning and say, “I can do whatever I want today”.  The ability to do what you want, with who you want, for as long as you want, is priceless. It is the highest dividend money pays.

July 2019 – I can do whatever I want from now on. “Hopefully”

As some of you know, I recently quit my Job in July 2019 – to take on the pursuit of happyness – to do whatever I wanted to do – Learn, Travel, Poker and Contribute.  Or as Nassim Taleb put it – True success is exiting some rat race to modulate one’s activities for peace of mind.  I enjoyed the Job I had of an Equity Analyst, the only role for 15 year of career, and had done well with it. However, a job also takes away considerable time in doing things which are no longer intellectually stimulating (boring meetings and non-sensical targets and report writing) and not to forget the wasteful time spent in commuting.   (I didn’t earn well enough to afford a place closer to work).  This was good enough reason for me to quit and now I am in complete control of my time.  Ability to do what you want is also best achieved by people like valuation guru Aswath Damodaran.  To remain totally unbiased to valuation exercise and to teaching the professor has decided to not take up any consultancy jobs ( Independece over Money) .  Being completely unbiased is near impossible as an equity analyst job. An employer chasing an IPO/Fund raising mandate will like the Analyst to tone down the negative views on the sector / company. 

Dont Agree on Savings View of Author

I do not agree with the authors views on Savings. The Savings topic seems to suggest that “nothing is enough” and keep saving till eternity. One should plan for shocks and surprises and then save some more but not to the point that he keeps earning money as the sole objective of life. One reason I see people not quitting the rat race because they are paranoid of savings. The only amount you need to save is what will help you in maintaining your current lifestyle for life. The actual benchmark of this is much lower but I would suggest save two folds of this amount and then instead of saving, give back the surplus to charity. The world is a much better place because of Bill Gates, Azim Premji and Chuck Feeney. Chuck Feeny is the Billionaire who wanted to go Broke and have his last cheque bounce and he is their.

Some of my favorite quotes from the book are:

History never repeats itself; man, always does.   -Voltaire

A genius is a man who can do the average thing when everyone else around him is losing his mind. – Napoleon

If you think that’s a big failure, we are working on much bigger failures right now. I am not kidding.  Some of them are going to make the fire phone look like a tiny little blip.  – Jeff Bezos on FIRE phone failure

PS: I have set a target of reading 52 books this year. 


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