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In The Psychology of Money, author Morgan Housel reveals timeless lessons for mastering money beyond just math.
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The author presents biases, flaws, behaviors, and attitudes that affect financial outcomes and shows how people’s psychology can work for or against them.
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Here are 8 takeaways from the book that every investor and trader should know.
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Financial success is not a hard science
Financial success is a soft skill, and how you behave matters more than what you know.
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Getting wealthy and staying wealthy are two different skills
The first requires risk-taking; the second demands patience and fear of losing it all.
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Spending money to show off is the fastest way to lose money
True wealth lies in your ability control your time. To build wealth, one must not spend just for the sake it.
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Compounding works best when you give it years to grow
Warren Buffett built his fortune from decades of compounding. So, start early and stay consistent.
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It is important to plan for your plan not going according to plan
Expecting the unexpected is a crucial skill. Flexibility in your plans protects you from financial inevitable uncertainties.
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The hardest financial skill is to make the goalpost stop moving
As income grows, expectations rise. Identifying 'enough' prevents endless stress and helps you enjoy the freedom money provides.
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Being rational is different from being reasonable
Financial decisions don’t have to be perfect; they should just align with your unique circumstances.
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Save. Just save. You don’t need a specific reason to save
Savings gives you freedom, flexibility, and peace of mind in uncertain times. You are already prepared for anything that comes along your way.
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