#source/book#money#compounding
Metadata
Author: Morgan Housel
Notes and Highlights
Sun, 27 Mar 22
If you risk something that is important to you for something that is unimportant to you, it just does not make any sense. ^ref-13802
Tue, 17 May 22
The big takeaway from ice ages is that you don’t need tremendous force to create tremendous results. ^ref-61405
Tue, 17 May 22
But good investing isn’t necessarily about earning the highest returns, because the highest returns tend to be one-off hits that can’t be repeated. It’s about earning pretty good returns that you can stick with and which can be repeated for the longest period of time. That’s when compounding runs wild. ^ref-26795
Wed, 10 Aug 22
Getting money requires taking risks, being optimistic, and putting yourself out there. But keeping money requires the opposite of taking risk. It requires humility, and fear that what you’ve made can be taken away from you just as fast. It requires frugality and an acceptance that at least some of what you’ve made is attributable to luck, so past success can’t be relied upon to repeat indefinitely. ^ref-9251
Wed, 10 Aug 22
More than I want big returns, I want to be financially unbreakable. And if I’m unbreakable I actually think I’ll get the biggest returns, because I’ll be able to stick around long enough for compounding to work wonders. ^ref-59372
note: Remember this
Sun, 28 Aug 22
Compounding doesn’t rely on earning big returns. Merely good returns sustained uninterrupted for the longest period of time—especially in times of chaos and havoc—will always win. ^ref-26045
Sun, 28 Aug 22
Destruction in the face of progress is not only possible, but an efficient way to get rid of excess. ^ref-13709
note: Hem
Sun, 04 Sep 22
These are not delusions or failures of responsibility. They are a smart acknowledgement of how tails drive success. ^ref-29237
Sun, 04 Sep 22
The highest form of wealth is the ability to wake up every morning and say, “I can do whatever I want today.” ^ref-50836
Sun, 04 Sep 22
The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. It is the highest dividend money pays. ^ref-30663
Sun, 11 Sep 22
The most powerful common denominator of happiness was simple. Campbell summed it up: Having a strong sense of controlling one’s life is a more dependable predictor of positive feelings of wellbeing than any of the objective conditions of life we have considered. ^ref-33563
note: Summry of campbell’s research
Sun, 11 Sep 22
Money’s greatest intrinsic value—and this can’t be overstated—is its ability to give you control over your time. ^ref-50180
note: Money as the mean to get this
Sun, 11 Sep 22
doing something you love on a schedule you can’t control can feel the same as doing something you hate. ^ref-39032
note: Worth noting maybe
Sun, 11 Sep 22
we’ve used our greater wealth to buy bigger and better stuff. But we’ve simultaneously given up more control over our time. ^ref-34615
note: Do not use emergency fund when it is not an emergency
Sun, 11 Sep 22
Compared to generations prior, control over your time has diminished. And since controlling your time is such a key happiness influencer, we shouldn’t be surprised that people don’t feel much happier even though we are, on average, richer than ever. ^ref-37985
Sun, 11 Sep 22
Take it from those who have lived through everything: Controlling your time is the highest dividend money pays. ^ref-60596
Wed, 14 Sep 22
If respect and admiration are your goal, be careful how you seek it. Humility, kindness, and empathy will bring you more respect than horsepower ever will. ^ref-18446
Wed, 14 Sep 22
Modern capitalism makes helping people fake it until they make it a cherished industry. But the truth is that wealth is what you don’t see. Wealth is the nice cars not purchased. The diamonds not bought. The watches not worn, the clothes forgone and the first-class upgrade declined. Wealth is financial assets that haven’t yet been converted into the stuff you see. ^ref-2483
Wed, 14 Sep 22
“Was it really necessary to tell her that if you spend money on things, you will end up with the things and not the money?”³⁰ You can laugh, and please do. But the answer is, yes, people do need to be told that. When most people say they want to be a millionaire, what they might actually mean is “I’d like to spend a million dollars.” And that is literally the opposite of being a millionaire. ^ref-63934
Wed, 14 Sep 22
There is a paradox here: people tend to want wealth to signal to others that they should be liked and admired. But in reality those other people often bypass admiring you, not because they don’t think wealth is admirable, but because they use your wealth as a benchmark for their own desire to be liked and admired. ^ref-33412
Wed, 14 Sep 22
“You might think you want an expensive car, a fancy watch, and a huge house. But I’m telling you, you don’t. What you want is respect and admiration from other people, and you think having expensive stuff will bring it. It almost never does—especially from the people you want to respect and admire you.” ^ref-46667
Sat, 17 Sep 22
Rich is a current income. Someone driving a $100,000 car is almost certainly rich, because even if they purchased the car with debt you need a certain level of income to afford the monthly payment. Same with those who live in big homes. It’s not hard to spot rich people. They often go out of their way to make themselves known. But wealth is hidden. It’s income not spent. Wealth is an option not yet taken to buy something later. Its value lies in offering you options, flexibility, and growth to one day purchase more stuff than you could right now. ^ref-26789
Sat, 17 Sep 22
bought had they stretched themselves thin. The ^ref-45417
Sat, 17 Sep 22
The important thing here is that finding more energy is largely out of our control and shrouded in uncertainty, because it relies on a slippery mix of having the right geology, geography, weather, and geopolitics. But becoming more efficient with the energy we use is largely in our control. The decision to buy a lighter car or ride a bike is up to you and has a 100% chance of improving efficiency. The same is true with our money. ^ref-18164
Sat, 17 Sep 22
There are professional investors who grind 80 hours a week to add a tenth of a percentage point to their returns when there are two or three full percentage points of lifestyle bloat in their finances that can be exploited with less effort. ^ref-48998
note: Saving more is more efficient at increasing the gap of your spending and income, compared to increasing income
Sat, 17 Sep 22
Past a certain level of income, what you need is just what sits below your ego. ^ref-50342
note: Your spending does grow when you grow your income. But it should hit a flatline
Mon, 19 Sep 22
Everyone knows the tangible stuff money buys. The intangible stuff is harder to wrap your head around, so it tends to go unnoticed. But the intangible benefits of money can be far more valuable and capable of increasing your happiness than the tangible things that are obvious targets of our savings. ^ref-29662
Mon, 19 Sep 22
If you have flexibility you can wait for good opportunities, both in your career and for your investments. You’ll have a better chance of being able to learn a new skill when it’s necessary. You’ll feel less urgency to chase competitors who can do things you can’t, and have more leeway to find your passion and your niche at your own pace. You can find a new routine, a slower pace, and think about life with a different set of assumptions. The ability to do those things when most others can’t is one of the few things that will set you apart in a world where intelligence is no longer a sustainable advantage. ^ref-25510
Sun, 02 Oct 22
If you view “do what you love” as a guide to a happier life, it sounds like empty fortune cookie advice. If you view it as the thing providing the endurance necessary to put the quantifiable odds of success in your favor, you realize it should be the most important part of any financial strategy. ^ref-47656
note: The thing providing the endurance
Sun, 02 Oct 22
Jack Bogle, the late founder of Vanguard, spent his career on a crusade to promote low-cost passive index investing. Many thought it interesting that his son found a career as an active, high-fee hedge fund and mutual fund manager. Bogle—the man who said high-fee funds violate “the humble rules of arithmetic”—invested some of his own money in his son’s funds. What’s the explanation? “We do some things for family reasons,” Bogle told The Wall Street Journal. “If it’s not consistent, well, life isn’t always consistent.”³⁹ Indeed, it rarely is. ^ref-8313
note: Kata feli, consistency is overrated. Is it?
Tue, 04 Oct 22
The problem is that we often use events like the Great Depression and World War II to guide our views of things like worst-case scenarios when thinking about future investment returns. But those record-setting events had no precedent when they occurred. So the forecaster who assumes the worst (and best) events of the past will match the worst (and best) events of the future is not following history; they’re accidentally assuming that the history of unprecedented events doesn’t apply to the future. ^ref-44334
note: The futurw is unpredicatable, termasuk ketika you use the event past to guess the future event
Tue, 04 Oct 22
Realizing the future might not look anything like the past is a special kind of skill ^ref-3703
note: Surprising event happens all the time in the present
Tue, 04 Oct 22
The correct lesson to learn from surprises is that the world is surprising. Not that we should use past surprises as a guide to future boundaries; that we should use past surprises as an admission that we have no idea what might happen next. ^ref-54347
note: A quote that resonte with the past note
Sat, 08 Oct 22
That doesn’t mean we should ignore history when thinking about money. But there’s an important nuance: The further back in history you look, the more general your takeaways should be. General things like people’s relationship to greed and fear, how they behave under stress, and how they respond to incentives tend to be stable in time. The history of money is useful for that kind of stuff. But specific trends, specific trades, specific sectors, specific causal relationships about markets, and what people should do with their money are always an example of evolution in progress. Historians are not prophets. ^ref-34949
note: This is the summary about what we can learn from the past regarding finance
Thu, 13 Oct 22
“Russian roulette should statistically work” syndrome: An attachment to favorable odds when the downside is unacceptable in any circumstances. Nassim Taleb says, “You can be risk loving and yet completely averse to ruin.” And indeed, you should. The idea is that you have to take risk to get ahead, but no risk that can wipe you out is ever worth taking. The odds are in your favor when playing Russian roulette. But the downside is not worth the potential upside. There is no margin of safety that can compensate for the risk. ^ref-34621
Sun, 16 Oct 22
But room for error is underappreciated and misunderstood. It’s often viewed as a conservative hedge, used by those who don’t want to take much risk or aren’t confident in their views. But when used appropriately, it’s quite the opposite. ^ref-24437
Sun, 16 Oct 22
if something has 95% odds of being right, the 5% odds of being wrong means you will almost certainly experience the downside at some point in your life. And if the cost of the downside is ruin, the upside the other 95% of the time likely isn’t worth the risk, no matter how appealing it looks. ^ref-11317
note: Dont play russian roulette
Sun, 16 Oct 22
The ability to do what you want, when you want, for as long as you want, has an infinite ROI. ^ref-14093
note: The purpose of money
Sun, 16 Oct 22
A good rule of thumb for a lot of things in life is that everything that can break will eventually break. So if many things rely on one thing working, and that thing breaks, you are counting the days to catastrophe. That’s a single point of failure. ^ref-7419
note: Menarik
Sun, 16 Oct 22
The trick that often goes overlooked—even by the wealthiest—is what we saw in chapter 10: realizing that you don’t need a specific reason to save. It’s fine to save for a car, or a home, or for retirement. But it’s equally important to save for things you can’t possibly predict or even comprehend—the financial equivalent of field mice. ^ref-59812
note: Reminder, saving doesn’t require reason
Wed, 19 Oct 22
It sounds trivial, but thinking of market volatility as a fee rather than a fine is an important part of developing the kind of mindset that lets you stick around long enough for investing gains to work in your favor. ^ref-19991
note: Ujung2 nya, biar tahan lama lagi
Wed, 19 Oct 22
The trick is convincing yourself that the market’s fee is worth it. That’s the only way to properly deal with volatility and uncertainty—not just putting up with it, but realizing that it’s an admission fee worth paying. There’s no guarantee that it will be. Sometimes it rains at Disneyland. But if you view the admission fee as a fine, you’ll never enjoy the magic. Find the price, then pay it. ^ref-23286
note: Key take away
Mon, 24 Oct 22
young lawyer aiming to be a partner at a prestigious law firm might need to maintain an appearance that I, a writer who can work in sweatpants, have no need for. But when his purchases set my own expectations, I’m wandering down a path of potential disappointment because I’m spending the money without the career boost he’s getting. We might not even have different styles. We’re just playing a different game. It took me years to figure this out. ^ref-52177
Thu, 03 Nov 22
A third is that progress happens too slowly to notice, but setbacks happen too quickly to ignore. ^ref-10270
note: I guess this is true for many things
Thu, 03 Nov 22
In 2004 The New York Times interviewed Stephen Hawking, the scientist whose incurable motor-neuron disease left him paralyzed and unable to talk at age 21. Through his computer, Hawking told the interviewer how excited he was to sell books to lay people. “Are you always this cheerful?” the Times asked. “My expectations were reduced to zero when I was 21. Everything since then has been a bonus,” he replied. Expecting things to be great means a best-case scenario that feels flat. Pessimism reduces expectations, narrowing the gap between possible outcomes and outcomes you feel great about. Maybe that’s why it’s so seductive. Expecting things to be bad is the best way to be pleasantly surprised when they’re not. Which, ironically, is something to be optimistic about. ^ref-22415
note: This is the answer to the, or at least justification to the question ‘why’
Sun, 06 Nov 22
There are many things in life that we think are true because we desperately want them to be true. I call these things “appealing fictions.” They have a big impact on how we think about money—particularly investments and the economy. An appealing fiction happens when you are smart, you want to find solutions, but face a combination of limited control and high stakes. They are extremely powerful. They can make you believe just about anything. ^ref-20864
Sun, 06 Nov 22
It can’t be overstated: there is no greater force in finance than room for error, and the higher the stakes, the wider it should be. ^ref-32011
note: I think i should remember this
Sat, 12 Nov 22
In the last 50 years medical schools subtly shifted teaching away from treating disease and toward treating patients. ^ref-54161
note: Maybe ini bakal terjadi ke bisnis jasa lainnya
Sat, 12 Nov 22
No matter how much you earn, you will never build wealth unless you can put a lid on how much fun you can have with your money right now, today. ^ref-32578
note: Shit man. Putting a lid is hard
Sat, 12 Nov 22
Use money to gain control over your time, because not having control of your time is such a powerful and universal drag on happiness. ^ref-52813
note: That is the use of money
Sat, 12 Nov 22
Being able to wake up one morning and change what you’re doing, on your own terms, whenever you’re ready, seems like the grandmother of all financial goals. Independence, to me, doesn’t mean you’ll stop working. It means you only do the work you like with people you like at the times you want for as long as you want. ^ref-16148
note: Another reminder for purpose
Sat, 12 Nov 22
Most of what we get pleasure from—going for walks, reading, podcasts—costs little, so we rarely feel like we’re missing out. ^ref-58029
note: I need to know my low cost pleasure giver
Tue, 15 Nov 22
Independence is our top goal. A secondary benefit of maintaining a lifestyle below what you can afford is avoiding the psychological treadmill of keeping up with the Joneses. ^ref-63902
note: Do i need to embody this idea?
Tue, 15 Nov 22
Nassim Taleb explained: “True success is exiting some rat race to modulate one’s activities for peace of mind.” I like that. ^ref-7769
note: I like it too
Tue, 15 Nov 22
I’m saving for a world where curveballs are more common than we expect. ^ref-61124
note: Saving for the unexpected, which is inevitable in one’s life
Tue, 15 Nov 22
“The first rule of compounding is to never interrupt it unnecessarily.” ^ref-22096
note: Do not take out tabungan money
Mon, 19 Dec 22
psychological treadmill of keeping up with the Joneses. ^ref-33506