The Psychology of Money by Morgan Housel (Book Review: 4*/5) !!!

  

41^st Book of 2020!

 

I have always been very scared of anything that gets associated with the subject of Commerce as I couldn’t handle even the basic Accounting subject in my college days. It’s another story that I wasn’t good even in Science which I had got enrolled myself in with my own interest. Therefore, every time, I get a book which claims to make Finance and Money easy, I just grab it. This is what made me pick up the popular book these days about which everyone is talking named “The Psychology of Money” written by Morgan Housel and published by Jaico Publications.

 

The book is divided into 20 different chapters where author has taken us through the logic as to how making money is not only about knowing finance but it is more about the person’s psyche related to it. Author tells how each one of us see money and stock market from our own experiences rather than through Excels and statistics that the Fund managers throw at us. The initial chapters are all about that and I really liked this angle because every time I have gone through a finance-related book, I only get to read jargons and author’s view about them whereas here, author, rather than talking about money and his views is talking about our relationship with money.

 

Author has given many real-life references to keep his points which makes this book a biographical account in many of the chapters. I liked how author also speaks about these real-life figures’ failures as openly as he does about their successes. Author has written every chapter independently yet how he has mapped them with each other in an orderly fashion ties the whole book together very nicely. Another USP of this book is that it not only speaks about money and finances but also about how to lead happy and peaceful life along with it. The way author has clubbed these two different topics from Self-Help genre and put into one book is really appreciable.

 

I enjoyed how author busted many myths so cleverly in simple language that I couldn’t help adoring such lessons and quotes. Like how he says that a person is financially good can’t be determined by the valuables he/she possesses. The book also discusses how historical factors are not considered while forecasting future based on past results. It was an eye-opener for me when author mentioned all the major incidents that has happened in the past which has affected economy like anything which is not considered at all while making future forecasts. Similarly, author named 7-10 individuals who have changed so much for the world that our living style is completely different from the past.

 

In another chapter, author explains how dynamic the concept of money and dealing with it is. It is elaborated giving the example of the most popular book on investment named “The Intelligent Investor” and how author had to change many things he stated with each edition just because the things change and with it, our relationship with money also changes. In the 15^th Chapter, we are introduced to how tough it is for us to hold and sustain the long-term investments and how important it is to maintain it for a secured money gain. Another chapter on seduction of pessimism is my favorite chapter in the book. It discusses how we often overlook the positive news but get attracted towards the negative news which helps fund managers and channels to play with our money.

 

Overall, the book is like a podcast where a person is motivating us and explaining us to not take the money game very seriously as it’s not about the tough calculations but about our psychology how we want to live our life. Different person like and want different things in life hence one rule can’t be applied to all. Hence, author in the very last chapter, tells us simply about what he does with the money which is so easy to understand that you might feel if what we have been hearing all these days has been a false story altogether.

 

Now, talking about the drawbacks, I felt that author has spent most of the time telling us things and problems but not given as much solution as expected from the book from the reader’s point of view. Also, author has mostly given scenarios of USA which might not apply for someone like me based in India. Some chapters are just plain feelings of the author about what people think about something rather than giving some output from it. I believe the book is more about the psychology than finance whereas the cover page claims to talk more about money and the psychology related to it.

 

Overall, this is a very fresh read and I liked this new stuff. I give it 4 stars out of 5. Please read if you wish to know how to go ahead with savings and investment.

PURCHASE THE BOOK HERE

 

Thanks.

 

WRITING BUDDHA