To read the Part one Click Here.
In the previous part, I discussed about some key psychological attribute of a money makers. In the next session,
The pick of wealth
Managing your time with flexibility is much more valuable than working all night, sleeping and taking speculative gambling or increasing your returns by 2%.
"If you like what you like, it's absurd to be able to do as much as you like with people you like. This is the best dividend payout."
Luxury cars can’t buy respect
People buy mansions and luxury cars because they want to respect and respect others. What they can’t do is that people don’t respect those who have great homes and cars. I think they respect the thing and have it. Therefore, it is a fool’s pursuit to buy something impressive to gain the respect and respect of others. You can’t buy something like this.
Being rich vs. wealthy
If you are rich, you have your current income. But getting rich is something else. I can’t see the part. What you are not spending is the money you have. Buying something in the future is an option.
Being rich offers short-term opportunities, while being rich offers the flexibility to have more of the items you need in the future (freedom, time, ownership)
An optimal portfolio is a night sleep portfolio. You can create reasonable profits while maximizing your quality of life and controlling your life. It will remain in severe depression and other sudden changes in the road. Much of the academic understanding of the ideal portfolio ignores the very real human factors that actually influence and have the potential to deviate from strategy.
Leave room for error
You need to leave room for error if you want to get involved in the game in the long run. “If you have the patience to tolerate a variety of potential outcomes that are prone to error, you’re less likely to benefit from outcomes that are unlikely to stay there long enough.” The big difference is to accept that there is a difference between being technically embracing and emotionally tolerating.
For example, you may have enough savings for two years. If your savings are close to $0, you may think about using it for work at any time, and you may quit your job to pursue your dream and throw it away. Strictly speaking, you can do this and you wouldn’t even be in debt. However, emotionally, it drains 30% of its savings and suddenly becomes mentally depleted and then begins to be tense. Then, after spending more than a year on the financial runway, you can abandon your dreams and go back to the day again.
Therefore, you can fall into a lane situation without explaining the model’s emotions.
Difficulty in Long turm financial planning
As humans, we tend to underestimate how our goals naturally change over time. This makes long-term financial planning difficult. We may think that children and big homes can never be owned at an early age. So we have a child in a house who made such a plan, but the plan does not explain. Therefore, explain what is not known when thinking about investment strategies.
The price of investing
The price of choosing an investment and trying to benefit the department follows. And that price is often hidden. Giving you burn is the ups and downs of Mr. Market. Uncertainties and anxieties that sometimes come to mind due to changes in market and personal conditions. You should be willing to pay the price if you need to invest. This is even more so, especially if you are very aggressive in your strategy.
The only way to handle the fees is to accept its existance and be willing to pay the price.
Determine your money game
If you have a money-making friend who trades short-term options and want to start receiving fear of missing out in the jungle, and want to play that game, really consider that it is in line with your goals. Determine to play yours game and the only aim should be to be earn more profit. May be it can take 30 years at all, but all you need to belive that you can make a profit. But how much does it cost? Know the game you are playing, while the people around you tell us about their latest tactics.
Looking back, Moving forward
When we look back in the past, we create a story about why certain things happened. And that story makes us think that the world is understandable, and that it makes sense in some way.
The problem is that this story is likely to be nonsense at all. What happened is likely completely random, but our story makes you think there are some lessons we can learn to predict the future well.
Avoid the illusion that we have complete control over the uncertain world we live in.
Only 1% Matters
If you make more money than you spend relatively young, the best way to optimize your long-term return on investment is to invest most of your money in diversifying your portfolio of low-cost index funds. That is. Inflation erodes the value of cash, which can historically be invested in assets such as compounded stocks at a rate of 6-7%, holding more than a percentage point of net worth in cash It’s stupid to do.
Investing in ways to maximize profits is a fascinating outlook, but such theories often do not explain psychology. Imagine you have a 95% investment in stocks and 5% cash. The market will fall 20-25%. Depends on how the slump affects your psychology, but with this small amount of cash, you’re more likely to sell some of the stock that panicked in that recession. And if you hold most of that panic sell portfolio in cash and feel safer, you could miss out on much more returns than if you didn’t sell it.
Focus on one savings that you have been pursuing on an ongoing basis, regardless of your income level. As a child, I learned how to “pay myself first”. I remember saving money as a kid. Spontaneous simplicity combined with spending to gain experience, not things, helps save.
My pursuit of paying back debt as soon as possible is the most rewarding financial decision to do well at night. My theory is that borrowing money to build an asset might be a wise decision, but borrowing money to pay bills is a recipe for disaster.
Many people confuse more money with winning. But that’s not all you can win at any cost. It’s about making a positive difference around us. It will be generous and kind. Thanks to money, you can be a little more yourself, bring joy to yourself and bring positive changes around you.
I think The Psychology of Money is a fast-paced, engaging reading that helps us understand why we make bad financial decisions and the tools that can make better decisions.
Book: The Psychology of Money
Author: Morgan Housel
Publisher: Harriman House/ Jaico Books