14 Lessons on Money, Investing, and Wealth from Morgan Housel

Welcome to The B612 Bulletin, where each week I will provide 1 question for you to ponder, 2 insights from others, and a deeper dive into some of my thinking on worldly wisdom I've found in my life and through chasing my curiosity. All delivered to you in 6 minutes or less.

A Quick Announcement:

Before this week's newsletter, I just wanted to make a quick announcement. As you can see, I'm experimenting with a new brand, and this newsletter is now known as The B612 Bulletin. No promises that this is the last update.

Secondly, I am reworking the content and format of this newsletter, and I hope it will be more reader-friendly.

Each week there will be 3 elements:

Thoughts from me
A question to ponder
Insights from others

The goal remains the same, to pursue life through curiosity and wonder and share what resonates to help myself and others live as meaningful of lives as we can. The format is all that is changing, and my long-form "essays" are not going away, they can just be found on my website, rather than through this newsletter.

Hopefully, this format works for you, and if it doesn't feedback is always welcome. Surely it'll change again in the future as I continue to adapt and iterate through experience.

Thanks as always for your support and for reading.

Taking control of your finances has less to do with money than you think.

Morgan Housel quickly climbed the ladder of authority on money and wealth following the success of his book, The Psychology of Money.

His approach to wealth tackles the emotional, rather than just the mathematical, and gives us clear guidance on the importance of wealth, and how to best manage it.

He acknowledges that we all have different experiences and feelings toward money, and leverages this to provide useful guidance to each of us uniquely.

Here are 14 lessons on money, investing, and wealth extracted from The Psychology of Money

1/ Be Humble and Compassionate

Be humble when things go your way in the markets. Be compassionate when bad things happen. Nobody escapes this game unscathed.

2/ Remove Ego, Grow Your Wealth

As we make more money, we tend to buy more things, nicer things, to show off our wealth. In doing so, we never increase our wealth, because we always live at our means and never have anything left to save.

The first key to growing your wealth is to set aside your ego, and your need to impress, and save the excess.

3/ The Sleep Effect

Too often we distill money and finance into a purely mathematical equation.

Manage money in a way that works for you, not one that maximizes the mathematical equation.

4/ When in doubt, hold longer

The magic of compounding interest is a formula that is most impacted by one factor — time horizon.

The single best way to improve your odds of success is to increase your time horizon. Not to chase exotic investments or higher returns.

5/ Accepting Being Wrong

If you play this game long enough, you’ll inevitably be wrong. There’s no avoiding it.

You can be wrong often and still be an incredibly successful investor.

6/ Money As a Means, Not the End

Money is a useful tool in this life. The most useful thing it can do for us is to provide us freedom. Freedom to spend our time how we want to.

Time is the most valuable currency on earth.

7/ Less Flair, More Kindness

It’s too often that those with money live in the biggest houses, drive the nicest cars, and wear the fanciest clothes. They display their wealth through their things. Many times, they are unkind and impatient.

Kindness is a better virtue than displaying wealth. The more you have, the kinder you should strive to be. Don’t ever let money compromise your virtues.

8/ Save for Saving’s Sake

Save for the sake of saving and investing in your future. Don’t wait to save until you have a 'reason' to save.

9/ Be Ready for the Costs

There is no such thing as a free lunch. Whether it’s opportunity costs or real costs, they always exist.

Determine what success is, and the costs you’ll have to pay to get there. If you are unwilling to pay them, reevaluate. Nothing comes for free.

10/ Create Safety Cushions

The worst thing you can do is give yourself little room for error. Little room for safety when turbulent times come, and risk of catastrophic failure.

The more cushion you can give yourself, the more resilient you will be, which will allow you to keep playing the game.

11/ Avoid the Tails

The bell curve exists for a reason. Most of us exist in the middle.

The more you make extreme decisions, the more likely you are to regret them down the road.

12/ Make Friends With Risk

Most people want their cake and to eat it too. In finance, no such thing as a free lunch.

You must make risk your friend because risk is what pays you over time through compounding. If you don’t like risk, you won’t reap the rewards.

13/ Define the Game

The most important decision we can make is to define the game we are playing for ourselves. We aren’t competing with anyone else, or chasing anyone else’s goals.

When we decide what our own goals and objectives are, we are much more likely to make decisions that lead us toward those goals.

14/ Respect the Game

There will be different opinions, turbulent markets, and crazy new ideas. There always has been and there always will be.

Respect the variation and the noise. Appreciate the bear and bull markets. The only way to stay in the game long enough to win is to respect the game you are playing.

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Cultivating wealth has little to do with getting rich quickly, or finding the hottest new investment.

Instead, it has much more to do with your daily choices, creating goals for yourself, and eliminating social ideas of wealth.

Control what you can control, and watch your wealth grow over time.

1 Question to Ponder this Week:

I. What are things in life that are unimportant, but that I'm (consciously or unconsciously) giving my attention to?

2 Insights from Others:

I. “Don’t aim at success—the more you aim at it and make it a target, the more you are going to miss it. For success, like happiness, cannot be pursued; it must ensue, and it only does so as the unintended side-effect of one’s dedication to a cause greater than oneself or as the by-product of one’s surrender to a person other than oneself. Happiness must happen, and the same holds for success: you have to let it happen by not caring about it."

-- Viktor Frankl, Man's Search for Meaning

II. “Then you shall pass judgment on yourself,” the king answered. “That is the hardest thing of all. It is much harder to judge yourself than to judge others. If you succeed in judging yourself, it’s because you are truly a wise man"

-- Antoine de Saint-Exupéry, The Little Prince