Key points from chapter one
*When it comes to investment and financial decisions people tend to tilt towards their unique life experiences, which means that how and when we are raised plays a major role on how we handle our finances and that doesn’t mean that we are crazy rather we are only giving out what was poured into us (there are many relatable examples that came to mind as regards this)
*what you experience is more compelling than what you learn second hand (key point for me) like they say experience is the best teacher.
*People see the world from the lenses of their own experiences and really we shouldn’t judge people wrongly because they do not see things the way we do, they are not crazy ‘the writer says’ they are only unaware or probable new to what is trending (i wish I had a better word)
* people are willing to take investment risk based on personal experience as at when or where they were born and raised.
Key points from chapter 2
*Life is a game of LUCK and RISK, failure or success in finance cannot be attributed solely on the outcome of our decisions, sometimes the people that failed in businesses or investments never took a bad decision they were somehow not lucky or probably had to learn the hard way (come to think of it does learning the hard way a bad way to learn?) because from the writer’s perspective, failure is also a way to learn and sometimes it’s inevitable because the world is a risky place and everyone is in a game with millions of people chasing almost the same thing. Unfortunately the world tends to celebrate only those had Luck and not those who encountered the unfortunate side of risk hmmmm(thoughts roaming my head) The Writer also used the story of Bill Gate and his Friends to elaborate on the subject of Luck and risk he stated that although Bill Gate was smart and hardworking still he was successful today because he was lucky to attend one of the high schools that had a computer which was where his journey began, for his friend he died without achieving his dreams to co own a computer company with Bill Gate….
Bottom line
Success sometimes may not be as a result of hard work as much as not all failures are attributed to laziness so we ought to be careful when judging the outcome of other people’s decision, no one decision is totally bad or good. Lastly, we should handle our finances in a way that when we take risk or make bad investments it won’t drop us to the floor we should still have something to fall back on so we can still be in the game till luck smiles on us
Summary of chapter 3
The writer was talking about the difference between having enough and greed
So he started with the stories of two successful businessmen (Rajat Gupta and Bernie Madoff) who had made so much legit money from their businesses but had to lose everything including their reputation because they wanted more, they didn’t know how and when to draw the line or probably didn’t have a sense of Enough so they ended up risking what they had for what they didn’t need…
He made a very sound point which is “the hardest financial skill is knowing the goalpost” hmmm(so many relatable personal experiences)
From my view, making money involves risks of all kinds both cash and non cash risk(pardon my English) because even for someone that is not into full time business, working requires your totality, people tends to overwork themselves to meet up certain target which are birthed by mare comparison….long story
Hmmm so much to grasp from the few pages of chapter 3 i just don’t know how to put it down but I’m sure you will understand
So I’ll just drop some personal key points from chapter 3
don’t risk what you have and need for what you don’t have and need.
know when to tell yourself I have ENOUGH(very hard thing to do)
lower your expectations or expectations shouldn’t fuel you quest for more….
Do not compare your achievements with other people achievements
Enough is not too little
weigh what you are willing to take a risk for, somethings are not worth the risk
Thank you
Key points from chapter 4
The writer was talking about compounding as the act of growing your money bit by bit
he says it requires time and consistency to build wealth…
MY TAKE HOME: It’s okay to hit it big at once but it may not be a sustainable way to build wealth, compounding entails taking tiny little steps at a time and reinvesting until you grow your wealth. I don’t need to take risk with investing all I have with the expectation of hitting it big all at once but I can start investing with a little and then give my investment time to grow. In summary it’s takes time to build sustainable wealth.
The writer used one Warren Buffett as a case study, he called him the wisest investor of his time and this is because he’s highest secret is the fact that he started investing early and he never stopped even at the age of 65 not only did he start early he gave his investments time to grow, the writer pointed in figures how this man’s wealth grew from age 10 to 30 till he was age 65
Now you see that we need to start teaching our children on how to start investing alongside with going to school Warren Buffett started at the age of 10and he was worth $84.5 billion at age 65 okay, let me not rant here
Summary of Chapter 5:
The writer talked about the mindset the takes one from being wealthy to staying wealthy….
He went ahead to explain that apart from compounding interest to get wealthy we need the “staying power” of survival mentality to go thru a hard path or season and yet not give up, sell out or retire.
He further said survival mentality is what gives birth to being an optimistic personality when compounding wealth(I hope I made sense) being optimistic is been able to make plans and still give room for uncertainty with the mindset that you can still strive even in hard times and now im thinking, is it why they said faith is a currency? okay maybe the writer is not talking about faith per say but I feel he is indirectly talking about faith
So bottom line, creating wealth involves taking risks, making bold steps etc while staying wealthy requires a strong will, a survival mentality, the ability to navigate thru hard times and then still keep your investments rolling, not retiring or selling out no matter what
I hope I made sense
Summary of chapter 6
The writer was pointing to the fact that in business and investment it is safer to make room for trial and error, he used the likes of Amazon, Apple and Disney as a case study….
This above listed organizations had their trial and error times, not all their investment pulled thru but a few. He said that the irony is that people tend to pay more attention to the success stories of this businesses and not the entire story…
Summary of chapter 7
The writer stated that the greatest value money gives is control over your time….
He stated that freedom to do what you want to do, when you want to do it and with whom you want to do it with is an unspent asset(wow)
He drew some examples from a research done by one psychologist named Angus Campbell. This research was done on aged people to know from their experiences what truly makes people happy, he found out that the ability to control their time, spend time with family and friend as often as they want to without having to worry about how they will pay their bills is what truly make people happy
Bottom line. Savings can give one the freedom to take a sick leave, leave a stressful job and then take your time to look for a more flexible job or take a lesser paid job that is not too time consuming, spend quality time with your family and friends….
That is to say TIME IS WEALTH OR ASSET
I hope I made sense
Summary of chapter 8 and 9
These chapters are very short and has a bit of connection
In chapter 8 the writer Morgan Housel talked about the paradox between looking rich and being wealthy, he stated that driving a luxurious car, living in a big house, having fancy things and all can make one look rich but there is a difference between Rich and Wealth.
He stated that the reason most rich people go out of their way to acquire luxurious lifestyles to prove they are something is because they want to be respected everywhere they go.
The paradox between looking rich and being wealthy is that rich is tangible while wealth is intangible that is to say wealth is the car not driven yet, the luxurious lifestyle not acquired yet, wealth is financial asset not spent yet as explained in chapter 9….
He also stated that people admire rich people because of what they see while they don’t really admire wealthy people because their assets aren’t visible or tangible.
He ended chapter 8 with this statement ”humility, kindness and empathy will bring you more respect than horsepower ever will” hmmm in chapter 9 he ended with “don’t judge people by what you see, modest people sometimes are the wealthiest” (rephrased)
Summary of chapter 10
In this chapter the writer was talking about the importance of saving money, he stated that building wealth has little to do with an increase in our income or investment returns but has more to do with “habitual saving” (rephrased)
From this chapter the key pointers for me are the facts that building wealth has less to do with how much we earn but rather it has everything to do with our HABITS.
Another is the ability to stay humble when we start noticing increase in our interest rate.
Bottom line: saving gives us the leverage of been flexible with our choices…. like he said in chapter 7 (money gives us control over our time) habitual savings helps us take control of any situation knowing we have something to fall back on
I hope I made some sense
Summary of chapter 11
In this chapter the writer encourages investors to make financial decisions within a reasonable point of view rather than being rational…
A rational investor makes his investment decisions based of what he thinks the market should be, he gambles his investment with so much expectations, this on its own is not bad but that’s not how the world works. He encourages us to be more realistic with our investments decisions knowing we are humans who are limited and cannot predict everything so there should be room for low returns in-case the market turns out that way
Key points for me is….
Being rational can lead to heart break or mental stress while being reasonable tend to give you a soft landing should anything go wrong which of course doesn’t mean things might not turn out good at the end of the day
Summary of chapter 12
In this chapter the writer was talking about the fact that surprises can occur in world when it comes to investments, the focal point of this chapter is that as long as investment is concern historical values or happenings do not predict future returns….
He started with this statement “everyone investing should hang on the wall, because what has never happened before happens all the time”
History should be a road map to guide our decisions and expectations, it can show us how people made mistakes and how they were able to reroute but it’s not a map to the future.
He further more used the work of one Benjamin Graham who was believed to be “the greatest investor of all times” in his book (the intelligent investor) Morgan Housel drew his conclusion to the above claim that investment strategies changes from time to time as Graham who authored the book, the intelligent investor, never repeated the same investment strategies he advised in his previous editions, for every new edition he comes up with a new strategy this is because the only stable study we can make as investors is how human behaves to money but not how the market works. This he said is not stable and has the ability to change from time to time
Summary of chapter 13
In this chapter the writer described investing as a game of odds and not certainties….
When making financial decisions we should give room for errors, in the sense that because as humans we cannot predict the outcome of events we should be prepared for uncertainties both mentally and financially….
Hmmm this chapter
Ok the way it is in my head
Room for error is likened to as having a backup plan for every of my plans for example, I want to invest in a business, first I’ll safe up my capital then I’ll draw out my business plan. If I’m putting room for error to work in my investment firstly I will not put in all of my savings I will leave something behind in-case… what I meant is that I will have a backup financial plan in-case I don’t start making profit on time or something goes wrong
Rooms for error is just me having a plan BCD and F to keep me in business
The man speak plenty English for this Chapter
Summary of chapter 14
In this chapter the writer talked about the importance of keeping your long term financial goals or plans flexible due to the fact that people changes with time and so are their choices…
What seem important to me today may not be what I want in a decade, there is a possibility that with age and exposure I would want to do something totally different from what I wanted earlier in life, with this in mind the writer recommends that people should cultivate the character of reviewing the plans as they get older in other to have a balance and trend with their current self.
He gave a story of a man who had always wanted to be a doctor from childhood, although he couldn’t achieve that during his younger age but he eventually achieved it when he was older, after achieving his goal of becoming a medical doctor he realized that his older self was not prepared for the goals he had when he was younger hereby making the profession he has always wanted as a child to become a burden to him because he couldn’t cope with the demands of his job as a doctor.
Button line: when it come to financial goals or plans compounding interest still remains the safest, although is not the easiest but it keeps you in check when it comes to financial expectations, you’ll be able to build the patience needed to navigate from one stage of your life to the other. As human we must give ourselves room for change thereby not putting too much expectations on our long term plans rather focusing on small win per time.
Summary of chapter 15
In this chapter the writer talked about how to deal with volatility and uncertainties in investments, which he stated that the best way to deal with investment risk is to know that there is always a price to pay.
In his words ‘everything has a price but not every price appears on labels’
He explained that when dealing with long term investment or compounding interest there is a price to pay and this prices does not come in hard currency but rather it come is form of, fears, anxiety, uncertainties and regrets.
Bottom line: when dealing with long term investment we should know that there will be times when the market will fluctuate, in those time we can experience fear, anxiety, volatility, uncertainty and regrets. During this period of time in our investment experience we are to see this experiences as a fee for building staying abilities rather than seeing it as a fine or as an avenue to quit. (Experience is not free) just like we buy stuff with our money and in return we gain an experience of what we purchased so it is with paying the price of allowing yourself go through the ups and downs of investment down-times with this you are paying the price for gaining what is takes to stick to your investment as long as it takes for you to win.
Summary of chapter 16
This chapter is basically about knowing who you are and what you can handle as an investor and stick to your own game.
In this chapter the writer’s advice to investors is for them to identify what they want to achieve from the investment market, write it down and follow through that part.
He stated that people can be greedy, which of course greed is part of human nature, and want to follow every cue on investment that they stumble into and at the end they end up regretting their actions and decisions.
The first thing to do is to know how long you have to stay on a particular investment.
Secondly what are your worth or I’ll say what is your capabilities at the moment.
Can you afford a long term investment or you would rather do a short term investment. (Trying to relate with crypto and their likes)
Bottom line: we shouldn’t let greed lead our investments decisions or take cue from people who are not playing the same game as we are. We should know our game and play along side with it.
Summary of chapter 17
In this Chapter the writer talked about the seduction of pessimism which is an attitude of always expecting the worse to happen.
He stated that people tend to believe more of bad news than good news. For instance if we are told now that Nigeria economy will improve by this time tomorrow we will not believe because in our head it is not possible. This he said makes common sense but that does not mean that there is no possibility that Nigeria economy cannot improve as said earlier.
He advised that while it is okay to listen to financial forecasts on how the investment market is likely to have a bad experience it is more profitable to have an optimistic mindset, knowing that even the odds are working in your favor.
This is the mindset we need if we want to stay long in the game.
Summary of chapter 18
Ok, I think this chapter has a slight similarity with chapter 17 cause the writer still dealt on guiding our believe system but in this chapter he added that our belief about money effects our view of it.
What we believe we expect and what we expect controls our perception.