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  About: Do you want to be a billionaire? What if you made 3 billion a day? Would you be happy if your earnings reached 8 billion? With this...

The psychology of money - Book Summary - Morgan Housel


Do you want to be a billionaire? What if you made 3 billion a day? Would you be happy if your earnings reached 8 billion? With this book you will learn how to become rich and how to maintain your wealth. This book will teach you true value for money.

Who should read this summary?

  •   To the employees
  •    To the Entrepreneur
  •    To stock traders
  •     To brokers
  •     To managers

About the author

Morgan Housel is an investor and author. Morgan is also a partner in The Collaborative Fund, an investment fund started by 14 people. He also wrote several articles for the Wall Street Journal and is the author of three books.

The psychology of money - Book Summary - Morgan Housel

              Now We Start a Summary 


Which of these would you like to choose from a beautiful bungalow or $ 3 billion? Freedom or good reputation?

Do you think you have made a lot of money in life? Do you want to know how to earn $ 84.5 billion?

If all these questions rotate in your mind, then read this book, in it you will get the answer to every question.

(The Greatest Show of the World) The Greatest Show on Earth:

Author Morgan Housel used to work in the valet to earn money when he was in college. Where he used to work was a luxurious and expensive hotel in Los Angeles. Once there came a guest who used to visit that hotel often, that boy was a technology executive and was very fast minded. It was only at the age of 20 that he designed a component for a Wi-Fi router and got it patented.

The Young Millionaire started several tech companies and later sold them. He was very successful. But in terms of money, he was a little unlucky.

Wherever the boy used to keep a bundle of notes with him and whoever talked with him, he used to show this money to him. He used to boast a lot by drinking alcohol. One day the man called the guard who parked the car and gave him some notes and ordered him to go to the nearby shop. In exchange for the note to the guard, the shopkeeper gave several $ 1000 gold coins.

So what would that young technician have done to those gold coins? He threw those coins into the sea. He also called his friends and together they threw the Koins into the sea as if someone threw stones in the pond.

A few days after that, one day he accidentally crashed into a hotel lamp by a Young Millionaire. The manager told him that the lamp cost $ 500, so the man created a spectacle. He took the money out of his pocket and gave it to the manager's mouth and said, "Here is $ 5000, now don't show me your face again"

Perhaps you are wondering whether this story is true ?Perhaps you are wondering what happened to that young Millionaire? Yes, this story is very true. In this book you will read more similar stories. But in the last of this story, the Young Millionaire goes bankrupt. He blew everything he had earned in a few years. All his money was lost and his friends and friends also left him.

Have you seen! With money you can buy everything, but you cannot buy good behavior.

Let's hear another story. Ronald Reid was a janitor, he was born and raised in a small village. He was the first person in his family who had studied up to high school and even more interesting was that he used to reach the school every day with a lift from the people.

Ronald was leading an ordinary life. For 25 years he worked in a gas station repairing vehicles. He made J.C. Worked on floor cleaning for 20 years in Pages. At the age of 38, Ronald bought a two-bedroom house. He bought that house for $ 12000 and spent his entire life in that house.

Ronald was also married but had no children. When he turned 50, his wife was dead. His neighbor said that Ronald's favorite hobby was to chop wood.

The day Ronald made the news headline was the day of his death. It was a matter of 2014. He was 92 years old. Ronald Reid had $ 8 million. He left $ 2 million for his two stepchildren and donated $ 6 million to a local hospital and library.

If you search for Ronald Reid in Wikipedia, then you will know that he was a janitor, gas station attendant, investor, mobilize and millennial.

But how did this happen?

There is no trick in this. Ronald did not win any lottery, nor did he receive any family money. Ronald was investing in blue stock chips after saving money for so many years. It was just such a thing. He used to save every penny, even he never took out interest. He had compounded his sewing for years and by the time he died, he had accumulated $ 8 million.

Do you know the concept of compounding?

We will talk about this later. But before that you should listen to another story.

Now let's take a look at the man who was completely different from Ronald Reid.

Richard Fuscon was an executive at Merrill Lynch. He did his MBA from Harvard. And he was retired at the age of 40. His name was also included in the 40 Under 40 Most Successful People list of a business magazine.

Richard owned an 18,000-square-foot bungalow in Connecticut that had two swimming pools, two lifts, seven garages, and 11 bathrooms. The maintenance cost of this bungalow was only $ 90,000 a month and Richard borrowed a lot in its maintenance.

But then his fate changed.

In 2008, the Financial Crisis came and overnight Richard came on the sidewalk. The same year he filed for bankruptcy.

What did we learn from the story of these two young millionaires Ronald Reid and Richard?

Financial success is not a science, but finance is one such field where people like Ronald Reid can also be successful. A person with humble education and experience cannot become a surgeon, architect or engineer.

But in finance, even a modest man like Ronald Reid can make a very good achievement.

Financial success is a soft skill that anyone can i never enough

Vanguard's founder John C, Boggle once told a story. A party was being held at the home of a bilinear. Kurt vanguette and Joseph Heller were sitting in a corner. Both were talking about the income of their host, who was a hedge fund manager. Kurt commented that one day's earnings of that man are also more than the full year sales of Joseph's Novel Catch-22.

To this Joseph responded with an astounding "He said that he has what a hedge fund manager would never have and that is" info"

What is your source of income now? Can you say that you have enough money?

Let's know from the story of these two people.

Rajat Gupta was a poor boy from Kolkata. He was an orphan but at the age of 45 he became a CEO.

Rajat was the CEO of Mckinsey, one of the world's renowned consulting firms. When he retired from the company in the year 2007, after that he got a big important position in the United Nations and the World Economic Forum. Rajat was also the board of directors of five different companies. Coming out of the slums of Kolkata, he showed himself to be the richest businessman.

In 2008, Rajat Gupta was worth $ 100 million.

But he was never satisfied with his money. He had become a Set a Millionaire, so now he had to become a Billionaire. He wanted to come in that circle.

Rajat then became the board of directors of Goldman Sachs. He pushed himself to become a Billionaire.

In 2008, Goldman Sachs was in an era of economic crisis. Warren Buffet took the decision to invest $ 5 billion in it to save the company. Being a board member, Rajat Gupta came to know about this before the public. Warren's funding was undoubtedly a possibility of the company's stock going up.

Sixteen seconds after the board meeting call, Rajat called Raj Rajaratnam, a hedge fund manager. This call was never recorded but Raj immediately bought 175,000 shares of Goldman.

After several hours, news of Warren's deal reached the public. Goldman's stock went up sharply. Raj earned $ 1 million in just a few hours. And the prosecutor reported that Rajat earned a total of $ 17 million.

It is considered a classic case of insider trading. Rajat Gupta washed his hands with all his wealth and had to go to jail and he also lost his reputation. Rajat already had $ 100 million, so why did he want another $ 1 billion?

He already had wealth, fame, power and freedom. But coming to greed, they lost everything. Because Rajat Gupta did not have Enf's sense.

We can learn three things from this story.

Lesson One: The most difficult financial skill is to stop yourself from accumulating more wealth. More power, more fame and greed for more money promotes more ambition than setisfaction. By coming to this point when you do not move forward, you feel as if you are going backward. And then you take the biggest risk to move forward.

Modern capitalism is very good in two things. Along with wealth, you also become greedy, a person forgets his limits. He does not understand where to stop.


Lesson number two: Social comparison means comparing others becomes a problem. Suppose a football player earns $ 500,000 a year, he already has a lot of money. But if we compare it with Mike Trout, who has a 12-year contract for $ 430 million a year, then we will find this stunted player very poor in front of him.

Now, assuming a hedge fund manager earns $ 36 million, but in 2018, the top ten highest paid hedge fund managers had earned at least $ 340 million a year, then we would find these $ 36 million far less than that.

But what if the top ten hedge fund managers who are earning $ 340 million for the year compare themselves to the top five? Top five hedge fund managers earn $ 770 million.

And if Top Five compares itself to Warren Buffet, who is $ 3.5 billion richer than them in 2018?

And if Warren Buffet wants to come to Jeff Bezos' level, whose net worth was $ 24 billion in 2018?

So you have seen that the wall of social comparison is very high. Nobody can touch it. If you get involved in the game that "I want to be as rich as my friends" then you can never win. Because there is no limit to win and earn money. There is no point where you feel you feel satisfied.


The only way to win is not to fight. Suppose you have enough even if the people around you are going crazy in want of more. A dealer in Las Vegas once said, "There is only one way to win in a casino: get out as soon as you enter"

Think you are in an executive village party. You and your friends are discus- ing who is the richest, who has the largest house and who is the most famous and whom people like the most. But you will see that there will be no winner.

The one who wins is self-assured, who is living a happy life with a loving family in a small house.

Lesson number three: Some things are more than money, fame and power. No matter how much you have it all. Rajat Gupta said this in his interview with the New York Times after he was released from jail. When he was asked what he had learned from this incident, he said:

"Do not attach more than anything, whether it is your reputation or your achievement. These things do not matter. This accident has ruined my entire reputation but I have now learned that I do not have to keep any more attachment to it.

Rajat Gupta wanted to save himself. He was giving cleanliness of his work. He was reassuring himself that his reputation does not matter to him anymore.

But he was wrong.

Reputation is priceless.

Freedom is priceless.

Family and friends are also prized.

It is also valuable to love people and get their love in return.

Happiness is precious.

But the only way to get it all is that you understand your limits, you remember when to take risk and when it means info.


Confounding Compounding:

We learned from one field, we get help in another field. Do you know why Ice Age came long ago? This is in some way similar to compounding in investment, it grows on your money.


After going to the 19th century, the scientist had agreed that there was an ice age in the earth at some point. Its proof was so close that it was easily ignored. Not only one ice age has come in the earth, but our earth has seen five ice ages, whose date we can estimate accurately today.

Can you imagine how much energy would be required to cover the whole world with snow, melt ice and cover with ice again? So this incident has happened five times. But why did Ice Age come?

There are many theories about what is the reason behind Ice Age. According to one theory, there has been a change in the climate due to the movement in the mountain range. Another theory says that ice is the natural environment of the earth, in which the volcanic eruption has changed.

However, these theories only expose one ice age and not five.

In the early 1900s, a Serbian scientist Milutin Milankovic studied the position of the Earth in the solar system. And he came to the conclusion that the gravitational strength of the sun and the moon has an effect on the axis of the earth. Milankovic said that many times it happens that the earth tilts too much on its axis, due to which it gets more solar radiation than normal.


Due to the change in the Earth's hemisphere, it became very cold due to which the whole earth was covered with a thick sheet of ice. Vladimir Koppen, a Russian meteorologist, has added a condition to this theory.

He said that due to the abnormal tilt, the cold had increased on the earth even during the summer season. This was the kind of heat in which there is not so much heat that the whole ice can melt. Even after summer, some parts of the earth remained covered with snow. Which made it easier for the snow to last even in the coming winter.

Year after year, snowflakes kept accumulating on the snow until the whole earth was covered with snow and thus came Ice Age.

You saw, the concept of compounding is also similar. Suppose you started depositing 10% of your annual salary in an index fund. And your annual interest rate is 10%.

So next year you will have 10% of your salary with an interest rate of 10%. Then you continued to deposit 10% of your salary by 2022. Every year you are adding 10% and every year your 10% interest rate is also growing. If you do not withdraw this money for the next ten years, then you will become a Millionaire.

Ice Age also came slowly due to the accumulation of snow. Compounding of interest also means the same: slowly accumulating money.

Do you know that Warren Buffet had been investing since the age of 10? He never withdraws his interest. He allowed this money to accumulate for many years. And when he turned 89, he had $ 84.5 billion. This was the result of his display and compounding of 8 decades.

If you calculate, Warren Buffet earned $ 84.5 billion just after his 50th birthday. This is all amazing of compounding power

Think about this equation 8 + 8 + 8 + 8 + 8 + 8 + 8 + 8 + 8 = 72. This is a sum. But what happens when you multiply 8 from 8 to 9 times? 8x8x8x8x8x8x8x8x8 = 134,217,728. Have you seen how different it is?

When Warren was 20 or 30, he did not spend his money just like that. And he did not stop investing until he was 60 or 70. He continued to invest. He deposited money for 25 years.

Many books have also been written on Warren's wealth. Again, he has $ 84.5 billion. He started investing from the age of ten and continued till 89. If a book is really written on compounding, its name should be "Shut Up and Weight"


Getting Wealthy vs. Staying Wealthy:

There can be many ways to become rich, but there is only one way to stay rich. Let us learn this from the story of these two investors.

Jesse Livermore was one of the best stock traders of his time. He was born in 1877. When the world did not even know that anyone could become a trader, he had established himself as a trader even before that. Jessie earned $ 100 million at the age of 30.

The stock market crashed in 1929, which led to the Great Depression. In those days, this news was spread all around. Wall Street had no idea how many stock traders had committed suicide.

On October 29, 1929, Jesse's family was waiting for him at home. His wife and two children are standing at the door looking forward to his arrival. And she was crying inside the Mother in Law Band room.

Jessie reached home, he was in shock, but not because his bankrupt had passed, he told the whole thing to his wife.

It happened that Jesse had made a bet that the stock market would come down and he got the right idea and he became a millionaire. That day on October 29, he made $ 3 billion.

When everyone was betting that the stock rate would go up, at that time JC had predicted that the stock market would fall. What was it then, he won the bet and became a bilineer overnight.

But something different happened to Abraham Germansky.

Abraham was a wealthy real estate developer. During 1920 he became a Millionaire. Like the rest of the traders, Abraham also made a big bet that the stock market would keep climbing.

Abraham disappeared a few days after the stock market crash. Actually, he had committed suicide.

Now again Jesse comes to Livermore and completes his story.

Jesse became overconfident and unstoppable after the 1929 crash. He went on to apply big conditions one after the other and kept winning. JC thought that he would always win like this. But in 1933 he lost all his money in the stock market.

Jessie also disappeared a few days later and she killed herself. The same thing that happened to Abraham happened to him after four years, like Abraham, he too was forced to commit suicide.

So you saw, both men had become rich but could not maintain their richness.

Making money is one thing, but maintaining it is a different thing.

To earn money, you have to get out, you have to take risk. You have to be optimistic.

But you have to be humble to keep the money. You have to remember that at any time, any second you can take away all your wealth. Because life is like this, nobody knows what will happen here. Sometimes you will come to the top, sometimes you will be at the bottom.

To maintain money, you have to learn to use money thoughtfully. And it is also a fact that money is earned by hard work, but luck also has a big hand in earning it.

Always remember that life is not always a thing in life, you will get defeat and failures in life too. The success of yesterday can not guarantee the coming golden tomorrow.

Now we go back to Warren Buffet and see how he has maintained his wealth for 70 years.

He invested his money for 10 years and allowed it to be compounded for more than a decade. And at the age of 89 he had $ 84.5 billion.

Warren knows investing, he knows which companies would be best for investing. They also know which are the cheapest stocks. And they know the most effective managers.

And in this way he became a rich man.

But Warren maintained his wealth this way.

He did not get into any deception.

He faced 14 receptions but never panicked and sold his stocks.

He did not put his reputations at stake.

He did not confine himself to any strategy, an opinion or a passing trade.

He never quitted nor retired.

Even after 65 years, he kept doing compounding. And that's how Warren went live.


In this book, you read the story of the young tech genius who threw $ 1000 gold coins into the ocean.

You also read the story of Ronald Reid in this book who, despite being a modest watchman, donated $ 8 million.

You also read about Richard Fuscone, a Harvard MBA graduate and real estate investor who lost everything in the 2008 Crisis.

And you also read the story of Rajat Gupta in this book, who despite having $ 100 million; he wanted $ 1 billion more.

In this book you also heard the story of Jesse Livermore and Abraham German sky. Of these, he earned $ 3 billion a day while the other was losing all his money. Later, both people had committed suicide.

Finally you read about Warrem Buffet in this book:

So out of all these people, who would you like to be like?

Remember that reputations, freedom, family, love and happiness are the most precious things in life, which is more than money, power and fame.

Remember this world is round and losing and winning is a part of life. Sometimes we have everything and sometimes nothing.

There are many ways to become rich, but there is only one way to maintain your wealth. So be humble, understand the value of money and learn to be happy in what you have.

Spend time with those you love dearly, because family and true friends are the biggest treasure of man.

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