{"id":11865,"date":"2022-12-01T23:56:00","date_gmt":"2022-12-01T15:56:00","guid":{"rendered":"https:\/\/www.granitefirm.com\/blog\/us\/?p=11865"},"modified":"2025-07-05T09:04:02","modified_gmt":"2025-07-05T01:04:02","slug":"psychology-of-money","status":"publish","type":"post","link":"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/01\/psychology-of-money\/","title":{"rendered":"The Psychology of Money"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/01\/psychology-of-money\/#Book_indtroduciton\" >Book indtroduciton<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/01\/psychology-of-money\/#Why_recommend_this_book\" >Why recommend this book?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/01\/psychology-of-money\/#Advanced_books_for_the_next_level\" >Advanced books for the next level<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/01\/psychology-of-money\/#Legend_investment_books_are_similar\" >Legend investment books are similar<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/01\/psychology-of-money\/#Long-term_and_sustainable\" >Long-term and sustainable<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/01\/psychology-of-money\/#Time_compounding_is_important_for_investors\" >Time compounding is important for investors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/01\/psychology-of-money\/#Good_investments_are_rare\" >Good investments are rare<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/01\/psychology-of-money\/#The_most_important_thing_is_to_keep\" >The most important thing is to keep<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/01\/psychology-of-money\/#Uncertainty\" >Uncertainty<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/01\/psychology-of-money\/#The_world_of_investing_is_not_100\" >The world of investing is not 100%<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/01\/psychology-of-money\/#The_world_is_unpredictable\" >The world is unpredictable<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/01\/psychology-of-money\/#There_is_no_such_thing_as_black_and_white\" >There is no such thing as black and white<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/01\/psychology-of-money\/#Alternative_Investments\" >Alternative Investments<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/01\/psychology-of-money\/#Related_articles\" >Related articles<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Book_indtroduciton\"><\/span>Book indtroduciton<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_recommend_this_book\"><\/span>Why recommend this book?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>&#8220;<a href=\"https:\/\/www.amazon.com\/Psychology-Money-Timeless-lessons-happiness\/dp\/0857197681\" target=\"_blank\" rel=\"noreferrer noopener\">The Psychology of Money<\/a>&#8221; is a book about money and wealth by Morgan Housel. This book is about some classic financial and investing ideas, such as Nassim Taleb, Daniel Kahneman and Warren Buffett. This is great for young people, or readers who have rarely read finance or investment books before, because this book has compiled for you some of the most recognized and well-respected principles of getting rich in life. <\/p>\n\n\n\n<p>The contents of the book are all things that have been discussed by other people. Don&#8217;t expect the author to have original or brand-new ideas in this book. This is not the author&#8217;s original intention.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advanced_books_for_the_next_level\"><\/span>Advanced books for the next level<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This is a great book on the topic of whether investors can advance to the &#8220;next level&#8221;. This book doesn&#8217;t talk about details, it talks about direction. But the direction is the most important!<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Legend_investment_books_are_similar\"><\/span>Legend investment books are similar<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>There are very few really useful views of the books on the market that talk about getting rich, and they are all similar in nature. I also wrote an article before, &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/19\/successful-investors\/\" target=\"_blank\" rel=\"noreferrer noopener\">The main investment principles of successful investors are similar<\/a>&#8221; and my views are very similar to those discussed in the books. These legend methods or viewpoints will not lose their luster with the pass of time; on the contrary, they prove that these principles are truths that can withstand the test. This reminds me of another book review I wrote on this blog a few months ago, &#8220;Richer, Wiser, Happier&#8221;, these two books have the same central idea, but author&#8217;s focus is different.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Long-term_and_sustainable\"><\/span>Long-term and sustainable<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Time_compounding_is_important_for_investors\"><\/span>Time compounding is important for investors<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Buffett&#8217;s net worth is $84.5 billion. Of this, $84.2 billion (99.74%) was accumulated after his 50th birthday. $81.5 billion (96.5%) came after he was in his 60s.<\/p>\n\n\n\n<p>Buffett&#8217;s investment career has an annualized return of 22%. Since 1988, Renaissance&#8217;s Simmons has made a 66% annualized return on his investments to $21B, but is 75% lower than Buffett&#8217;s. The main reason is that Simons didn&#8217;t go all-in on investing until he was 50 years old. I mentioned this point 1-1 in my &#8220;The Rules of Super Growth Stocks Investing&#8221; book, and emphasized the biggest difference between the two.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Good_investments_are_rare\"><\/span>Good investments are rare<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In 2013, Buffett said that he owned 400 to 500 stocks in his life, and most of the money was made in 10 of them.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_most_important_thing_is_to_keep\"><\/span>The most important thing is to keep<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Making money requires taking risks, being optimistic, and continuing to do so. But saving money requires the opposite of risk, which requires humility and the constant fear that whatever you do will result in your possessions being taken away very quickly.<\/p>\n\n\n\n<p>Buffett: &#8220;There&#8217;s no reason to take any risk on something you already have, or something you don&#8217;t need but don&#8217;t have.&#8221;<\/p>\n\n\n\n<p>Nassim Taleb: &#8220;Having an edge and surviving are two different things: the former needs the latter. You have to do whatever it takes to avoid screwing things up.&#8221;<\/p>\n\n\n\n<p>A lot of things in business and investing work this way\u2014the long tails (note 1), the furthest reaches of the distribution of outcomes, have huge implications in finance. And a few of these events can explain most of the results.<\/p>\n\n\n\n<p>Note 1: The long tail effect refers to the fact that those products or services with small sales volume but a large variety of products or services that are not valued originally will have a huge cumulative total number or revenue, which will exceed the total number and revenue of a few mainstream products. In the Internet, finance, investment, statistics and other fields, the long tail effect is particularly significant.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Uncertainty\"><\/span>Uncertainty<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_world_of_investing_is_not_100\"><\/span>The world of investing is not 100%<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Investors can be wrong half the time and still get rich. It sounds incredible, and it&#8217;s hard to comprehend.<\/p>\n\n\n\n<p>Your personal experience with money may account for 0.00000001% of what happens in the world, but maybe 80% of your view of the world works.<\/p>\n\n\n\n<p>Michael Moritz of Sequoia Capital said: &#8220;We assume that tomorrow will not be like yesterday. We cannot assume that yesterday&#8217;s success will translate into tomorrow&#8217;s good luck.&#8221;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_world_is_unpredictable\"><\/span>The world is unpredictable <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>History can mislead the future of the economy and the stock market because it fails to take into account the structural changes relevant to today&#8217;s world.<\/p>\n\n\n\n<p>Forbes&#8217; list of the top 400 richest people, on average, 1\/5 of the list is updated every ten years.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"There_is_no_such_thing_as_black_and_white\"><\/span>There is no such thing as black and white<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Most things in the world are not as good or as bad as they appear as it looks like.<\/p>\n\n\n\n<p>Whether it is &#8220;inspirational and boldness&#8221; or &#8220;stupidly reckless&#8221;, the line between the two may be only a millimeter, and only after the fact can judge. The line between boldness and recklessness can be fine, and when we don&#8217;t give proper calculation to risk and luck, they are often invisible.<\/p>\n\n\n\n<p>Be careful who you praise and admire, and also be careful who you despise and wish to avoid being.<\/p>\n\n\n\n<p>The more common a pattern is, the more it applies to your life. Therefore, focus less on rare specific individuals, specific, or case studies and more on broad patterns.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"97\" height=\"150\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2022\/12\/m-1600x1200-1.jpg\" alt=\"The Psychology of Money\" class=\"wp-image-15995\"\/><figcaption class=\"wp-element-caption\">credit: amazon.com<\/figcaption><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Alternative_Investments\"><\/span>Alternative Investments<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Some great investors buy large collections of art and paintings, hold them long enough to get the best returns (Note 2), and it turns out that this can also be a great investment.<\/p>\n\n\n\n<p>Note 2: According to market research firm Market Decipher, global collectibles sales are expected to increase from $412 billion to $692 billion over the next 10 years. Element Pointe Advisors, a Miami-based wealth management firm, said: \u201cFor investors, it is wise to take a long-term view. Many collectibles may be unsustainable in value over the next two or three years. Any buyer should own them for more than 10 years. Don\u2019t expect to be profitable in the short term.\u201d That\u2019s because in a recession, collectibles are more vulnerable to price drops than other assets because many of them aren\u2019t essential.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Related_articles\"><\/span>Related articles<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/07\/04\/tools-of-titans\/\">&#8220;Tools of Titans&#8221;<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/03\/18\/same-as-ever\/\">&#8220;Same As Ever&#8221;<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/05\/23\/the-fog-of-war\/\">&#8220;The Fog of War&#8221;<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/05\/07\/die-kunst-des-klaren-denkens\/\">&#8220;Die Kunst des klaren Denkens&#8221;<\/a><\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/05\/11\/jim-simons-pass-away\/#google_vignette\" target=\"_blank\" rel=\"noreferrer noopener\">Jim Simons, the lord of quantitative investing<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/08\/27\/love-your-job-reputation\/\" target=\"_blank\" rel=\"noreferrer noopener\">Protect your reputation and love your job<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/08\/15\/dream-big-and-win\/\" target=\"_blank\" rel=\"noreferrer noopener\">You can &#8220;Dream big and Win&#8221; also<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/08\/25\/richer-wiser-happier\/\" target=\"_blank\" rel=\"noreferrer noopener\">Richer, Wiser, Happier<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/30\/secrets-of-the-millionaire-mind\/\" target=\"_blank\" rel=\"noreferrer noopener\">Secrets of the Millionaire Mind<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/27\/rich-dad-poor-dad\/\" target=\"_blank\" rel=\"noreferrer noopener\">Rich dad, poor dad<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/01\/psychology-of-money\/\" target=\"_blank\" rel=\"noreferrer noopener\">The Psychology of Money<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/11\/13\/the-millionaire-fastlane\/\" target=\"_blank\" rel=\"noreferrer noopener\">Unconventional &#8220;The Millionaire Fastlane&#8221;<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/25\/the-almanack-of-naval-ravikant\/\" target=\"_blank\" rel=\"noreferrer noopener\">An excellent book for career and life- The Almanack of Naval Ravikant<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/19\/successful-investors\/\" target=\"_blank\" rel=\"noreferrer noopener\">The main investment principles of successful investors are similar<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/02\/15\/paul-gettys-how-to-be-rich\/\">Paul Getty&#8217;s &#8220;How to be rich&#8221;, by the world&#8217;s richest man in the mid-20th century<\/a>&#8220;<\/li>\n<\/ul>\n\n\n\n<p><em><strong>Disclaimer<\/strong><\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>The content of this site is the author\u2019s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.<\/em><\/li>\n\n\n\n<li><em>I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers&#8217; direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.<\/em><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>The Psychology of Money, Why recommend this book? &#8220;The Psychology of Money&#8221; is a book about money and wealth by Morgan Housel. This book is about some classic financial and investing ideas, such as Nassim Taleb, Daniel Kahneman and Warren Buffett. <\/p>\n","protected":false},"author":1,"featured_media":15995,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[65,68,8,72,35,11],"tags":[],"class_list":["post-11865","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-books","category-insight-second-level-thinking","category-investing-books","category-jim-simons","category-long-term-investing","category-buffett"],"_links":{"self":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/11865","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/comments?post=11865"}],"version-history":[{"count":31,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/11865\/revisions"}],"predecessor-version":[{"id":39738,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/11865\/revisions\/39738"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media\/15995"}],"wp:attachment":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media?parent=11865"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/categories?post=11865"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/tags?post=11865"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}