[Podcast] Pocketing Prosperity: Exploring Morgan Housel’s Wealth Wisdom Part 2

Have you set big goals for yourself in investing or business in 2024? Is financial freedom part of your plan?

Today’s show is a continuation of a two-part series where Mark Creedon and I explore 18 Wealth Lessons from Morgan Housel’s great book The Psychology of Money.

Housel tells us about the principles of behavioural finance rather than property strategy or finance tips.

The psychology of investor behaviors can help you understand why some make successful moves while others don’t, and help you create the right wealth habits and mindset for yourself.

In the last show, we discussed 9 wealth lessons in the first 9 chapters of the book.

Mark and I continue today with the rest of the chapters.

No matter where you are on your financial journey, today’s show will help you on the way to financial freedom and property, investment, and business success.

The Mindset Behind Building and Maintaining Wealth

I believe that Morgan Housel’s book, The Psychology of Money, contains great lessons for anyone who wants to build wealth and attain financial freedom through investing.

I’m excited to share more of my thoughts about it with you. Joining me again is Mark Creedon, founder of Mastermind Business Accelerator, business coach for many successful Australians, and now, CEO of Metropole.

• Income isn’t enough by itself. A person with a high income who never saves or invests isn’t building wealth.
  • A high savings rate can trump income level in wealth accumulation.
    • “Building wealth has little to do with your income or investment returns and lots to do with your savings rate.”
  • Being reasonable is easier to do consistently than being coldly rational, which means you’ll be more likely to keep doing it. That consistency is the most important thing when managing money.
    • “Do not aim to be coldly rational when making financial decisions. Aim to just be pretty reasonable. Reasonable is more realistic and you have a better chance of sticking with it for the long run, which is what matters most when managing money.”
  • You don’t always know what’s going to happen, because you can’t predict the X-factor that will happen next.
    • But while you can’t predict what future surprises will be based on past surprises, you can be aware that there will be surprises and that they may change your plans.
      • “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.”
    • Because the world is uncertain, you have to plan to give yourself a margin of error. This allows you to create a buffer as you navigate the financial world.
      • “Margin of safety—you can also call it room for error or redundancy—is the only effective way to safely navigate a world that is governed by odds, not certainties. And almost everything related to money exists in that kind of world.”
    • You have to make plans for the long run, but it’s important to remember that your needs and wants will change as time passes.
      • “Long-term planning is harder than it seems because people’s goals and desires change over time.”
    • The prices aren’t always immediately obvious, but everything does have a price.
      • “Everything has a price, but not all prices appear on labels.”
    • Your needs and your goals aren’t the same as the needs and goals of the next person.
      • That means that their advice, even if it worked for them, maybe wrong for you.
        • “Beware taking financial cues from people playing a different game than you are.”
      • Pessimistic viewpoints are easy to find because they’re often based on a recent occurrence, like a blip in the market. Optimism requires taking a longer, more historical view.
        • However, that means the optimists are likely to be right in the long run.
          • “Optimism sounds like a sales pitch. Pessimism sounds like someone trying to help you.”
        • Remember that you have an incomplete view of the world. A story may help fill in the gaps, but it’s also risky – sometimes a great story is just a story.
          • “Stories are, by far, the most powerful force in the economy. They are the fuel that can let the tangible parts of the economy work or the brake that holds our capabilities back.”

Wealth is about more than just knowing where to invest. It’s about understanding the nuances of financial behaviours.

You need to be able to balance practical strategies with an awareness of the psychological factors involved.

Links and Resources:

Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us

Why not join Metropole’s Mastermind Business Accelerator

Learn more about Mark Creedon – Business Coach to some of Australia’s leading entrepreneurs

Get a copy of Mark’s new book here – Have a Business, not a Job

Get a bundle of eBooks and reports – www.PodcastBonus.com.au

Join us at Wealth Retreat 2024 – find out more and register your interest – www.WealthRetreat.com.au

Some of our favorite quotes from the show:

“I guess what you've got to learn to do is spend less than you earn, and I guess that means doing the hard things now, so you have an easy life later.” – Michael Yardney

“But there is a learning fee and the learning fee can come from making mistakes, overpaying for a property, buying in the wrong area, buying at the wrong time, not buying an investment-grade location, being sucked in by spruikers or salespeople who don't have your best interest at heart.” – Michael Yardney

“Morgan and I said progress happens too slowly to notice, but setbacks happen too quickly to ignore.” –Michael Yardney

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