# The Psychology of Money

*Timeless Lessons on Wealth, Greed, and Happiness by Morgan Housel*

2022-02-27 | `psychology` `economics` `philosophy`

> There is no reason to risk what you have and need for what you don't have and don't need. Timeless lessons on wealth, greed, and happiness.

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Having more money will make you happier ONLY if that means you'll have more control over your time.

> "I did not intend to get rich. I just wanted to get independent." Charlie Munger.

## Money Misunderstandings

### Compounding

- Start investing with whatever you can afford, and stay invested.
- Leverage the power of compounding.

### Volatility

- It's not possible to get high returns without volatility.
- It's the emotional price you need to pay if you want good annual returns.
- Embrace volatility. Volatility is a fee, not a fine.

### Tail investments

- It's hard to predict what will be the "next big thing", therefore it's important to diversify.
- A tail investment is single investment that massively outperform all others, and made up for several bad investments.
- Make many diversified investments to benefit from a few tail investments.

## Quotes

> "There is no reason to risk what you have and need for what you don't have and don't need."

> "Long tails – the farthest ends of a distribution of outcomes – have tremendous influence in finance, where a small number of events can account for the majority of outcomes."

> "The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. It is the highest dividend money pays." 

> "Like everything else worthwhile, successful investing demands a price. But its currency is not dollars and cents. It's volatility, fear, doubt, uncertainty, and regret – all of which are easy to overlook until you're dealing with them in real time."

> "Few things matter more with money than understanding your own time horizon and not being persuaded by the actions and behaviors of people playing different games than you are."

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## Video Summary

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