At a certain point in my early thirties I decided to take control of my own financial savings and future. I didn’t like feeling dependent on a financial advisor, and wasn’t convinced the fees were worth it (or that his advice was very good). So I began to read. Like many, I started with Benjamin Graham’s The Intelligent Investor, but even that was a few steps ahead of what I could really wrap my mind around as a practical guide to what I needed. People like Norman Rothery and Warren Buffet (and later, of course, Charlie Munger), modern day Graham disciples, became helpful guides. I read the business section of the Globe and Mail, and always enjoyed the part of the Saturday paper about retirement advice. I also got very latched on to the ‘couch potato’ approach to investing (i.e. passive investing in broad market ETFs).
I’ve continued to read in this area, and recently came across an interview of the Farnam Street podcast with Morgan Housel, whose practical and sensible wisdom I loved. So I bought his first book, The Psychology of Money: Timeless Lessons on Wealth, Greed and Happiness, which was outstanding. Housel wrote a column for The Motley Fool for many years, where he honed his writing skills, which are outstanding. He is engaging and incredibly easy to read, while always being thoughtful, and economical with his language.
The book is divided up into twenty chapters, each with a short and thoughtful piece of wisdom about personal finance through the lens of psychology, all couched in stories and helpful analogies. One of my favourite ideas is how strongly he argues for the power of compounding, and the importance of time as the most important ingredient in investing – much more than choosing the right stocks or timing the market. And because it’s based in psychology, this helped me think more deeply in other areas like compounding reputation or relationships. Perhaps his most useful advice was ‘less ego, more wealth’. Just stop comparing yourself to the Cohens and you have a much better chance of ending up wealthy (even if you don’t end up rich), and by wealthy he means the opportunity for freedom that money offers. So, it’s really a book about how humans think, and the common mistakes we make, applied to the area of personal finance.
Whether you need the advice or not, this is an insightful and enjoyable book.
Just Because I Liked It:
- I was recently introduced to the podcast Acquired, and am loving the episode about Costco.
- As I learn to navigate the American healthcare system (i.e. morass), a friend sent me this guide from South Park.