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1. No Oneâs Crazy
Every decision people make with money is justified by taking the information they have at the moment and plugging it into their unique mental model of how the world works.
People do some crazy things with money but no one is crazy.
Every decision people make with money is justified by taking the information they have at the moment and plugging it into their unique mental model of how the world works.
People do some crazy things with money but no one is crazy.
2. Luck & Risk
Luck and risk are both the reality that every outcome in life is guided by forces other than individual effort.
They are so similar that you canât believe in one without equally respecting the other.
Luck and risk are both the reality that every outcome in life is guided by forces other than individual effort.
They are so similar that you canât believe in one without equally respecting the other.
3. Never Enough
Life isnât any fun without a sense of enough. Happiness, as itâs said, is just results minus expectations.
âEnoughâ is realizing that the opposite will push you to the point of regret.
The hardest financial skill is getting the goalpost to stop moving.
Life isnât any fun without a sense of enough. Happiness, as itâs said, is just results minus expectations.
âEnoughâ is realizing that the opposite will push you to the point of regret.
The hardest financial skill is getting the goalpost to stop moving.
4. Confounding Compounding
The 8th wonder of the world.
A small starting base can lead to extraordinary results they seem to defy logic.
$81.5 billion of Warren Buffettâs $84.5 billion net worth came after his 65th birthday.
His skill is investing, but his secret is time.
The 8th wonder of the world.
A small starting base can lead to extraordinary results they seem to defy logic.
$81.5 billion of Warren Buffettâs $84.5 billion net worth came after his 65th birthday.
His skill is investing, but his secret is time.
5. Getting Wealthy vs. Staying Wealthy
There are a million ways to get wealthy, but thereâs only one way to stay wealthy: some combination of frugality and paranoia.
Good investing is not necessarily about making good decisions. Itâs about consistently not screwing up.
There are a million ways to get wealthy, but thereâs only one way to stay wealthy: some combination of frugality and paranoia.
Good investing is not necessarily about making good decisions. Itâs about consistently not screwing up.
6. Tails, You Win
Long tails, the farthest ends of distribution of outcomes, have tremendous influence in finance, where a small number of events can account for the majority of outcomes.â
Anything that is huge, profitable, famous, or influential is the result of a tail event.
Long tails, the farthest ends of distribution of outcomes, have tremendous influence in finance, where a small number of events can account for the majority of outcomes.â
Anything that is huge, profitable, famous, or influential is the result of a tail event.
7. Freedom
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.
The highest form of wealth is the ability to wake up every morning and say, âI can do whatever I want today.'
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.
The highest form of wealth is the ability to wake up every morning and say, âI can do whatever I want today.'
8. Man in the Car Paradox
No one is impressed with your possessions as much as you are.
The paradox is people tend to want wealth to show others that they should be admired.
But in reality, those folks often bypass admiring you, because they donât find wealth is admirable.
No one is impressed with your possessions as much as you are.
The paradox is people tend to want wealth to show others that they should be admired.
But in reality, those folks often bypass admiring you, because they donât find wealth is admirable.
9. Wealth is What You Donât See
Spending money to show people how much money you have is the fastest way to have less money.
The truth is that wealth is what you donât see.
Wealth is financial assets that havenât yet been converted into the stuff you see.
Spending money to show people how much money you have is the fastest way to have less money.
The truth is that wealth is what you donât see.
Wealth is financial assets that havenât yet been converted into the stuff you see.
10. Save Money
Building wealth has little to do with your income or investment returns, and lots to do with your savings rate.
Learning to be happy with less money creates a gap between what you have and what you want.
You donât need a specific reason to save.
Building wealth has little to do with your income or investment returns, and lots to do with your savings rate.
Learning to be happy with less money creates a gap between what you have and what you want.
You donât need a specific reason to save.
11. Reasonable > Rational
Do not aim to be coldly rational when making financial decisions. Aim to just be pretty reasonable.
Reasonable is more realistic and you have a better chance of sticking with it for the long run, which is what matters most when managing money.
Do not aim to be coldly rational when making financial decisions. Aim to just be pretty reasonable.
Reasonable is more realistic and you have a better chance of sticking with it for the long run, which is what matters most when managing money.
12. Surprise!
The correct lesson to learn from surprises is that the world is surprising.
It is smart to have a deep appreciation for economic and investing history.
History helps us calibrate our expectations, but it is not, in any way, a map of the future.
The correct lesson to learn from surprises is that the world is surprising.
It is smart to have a deep appreciation for economic and investing history.
History helps us calibrate our expectations, but it is not, in any way, a map of the future.
13. Room for Error
Margin of safety, also called room for error, is the only effective way to safely navigate a world that is governed by odds, not certainties.
Almost all related to money exists in that kind of world.
You have to plan on your plan not going according to plan.
Margin of safety, also called room for error, is the only effective way to safely navigate a world that is governed by odds, not certainties.
Almost all related to money exists in that kind of world.
You have to plan on your plan not going according to plan.
14. Youâll Change
Long-term planning is harder than it seems because peopleâs goals and desires change over time.
An underpinning of psychology is that people are poor forecasters of their future selves.
We should also come to accept the reality of changing our minds.
Long-term planning is harder than it seems because peopleâs goals and desires change over time.
An underpinning of psychology is that people are poor forecasters of their future selves.
We should also come to accept the reality of changing our minds.
15. Nothingâs Free
Everything has a price, but not all prices appear on labels.
The problem is that the price of a lot of things is not obvious until youâve experienced them firsthand when the bill is overdue.
Define the cost of success and be ready to pay for it.
Everything has a price, but not all prices appear on labels.
The problem is that the price of a lot of things is not obvious until youâve experienced them firsthand when the bill is overdue.
Define the cost of success and be ready to pay for it.
16. You & Me
Beware of taking financial cues from people playing a different game than you are.
There is no single right answer; just the answer that works for you.
Have a plan/strategy that works for you and stick to it.
Beware of taking financial cues from people playing a different game than you are.
There is no single right answer; just the answer that works for you.
Have a plan/strategy that works for you and stick to it.
17. The Seduction of Pessimism
Optimism sounds like a sales pitch. Pessimism sounds like someone trying to help you.
Itâs easier to create a narrative around pessimism because the story pieces tend to be fresher and more recent.
Optimism sounds like a sales pitch. Pessimism sounds like someone trying to help you.
Itâs easier to create a narrative around pessimism because the story pieces tend to be fresher and more recent.
18. When Youâll Believe Anything
Stories are the most powerful force in the economy.Â
They are fuel that can let the tangible parts of the economy work or the brake that holds our capabilities back.
The more you want it to be true, the more likely you are to believe it is true
Stories are the most powerful force in the economy.Â
They are fuel that can let the tangible parts of the economy work or the brake that holds our capabilities back.
The more you want it to be true, the more likely you are to believe it is true
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