The Psychology of Money by Morgan Housel discusses strange ways people think about wealth, greed, and happiness. It explains that wealth represents financial assets not yet converted to physical assets, but people often seek status by buying lavish items. True wealth provides growth opportunities and flexibility. The book also emphasizes that investing success requires enduring volatility, as luck and unexpected events influence outcomes. It advises readers to choose reasonable investment strategies aligned with their goals and time horizons over strictly rational ones. Overall, the book offers insights into human psychology around money and financial decision-making.

1. The
Psychology
of Money by
Morgan
Housel
By
Prince Raghav
Kishan Sachdev
Pravin Vishwakarma
Satish Kodiyatar
Mirbarakatullah Najeebi

2. “
▸ The Psychology of Money is
about the strange ways people
think about wealth, greed, and
happiness.
2

3. ▸ Wealth is financial assets that hasn’t been converted to
to the physical assets.
▸ Being rich is showing that you are rich by buying fancy
car big house etc.
▸ Wealth is use for growth, opportunity and flexibility.
3
WEALTH IS WHAT YOU
DON’T SEE

4. Use money to buy
Freedom
The highest dividend paid by the
money is the ability to buy the
time.
When you can do whatever you
want, whenever you want and for
as long as you want than only
you will be called financially
independent.

5. “Warren Buffett Is a Prime
Example of the Power of
Compound Interest”
5

6. Nothing’s Free
6
▸ The price of investing success is not immediately
obvious. It’s not a price tag you can see, so when the
bill comes due, it doesn’t feel like a fee for getting
something good.
▸ It feels like a fee for doing something wrong.
▸ “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.”

7. “ • Every outcome in life is guided by forces
other than individual effort.
• Bill Gates had a competitive advantage
over millions of other students because he
attended one of the only high schools in the
world that had the cash and foresight to
buy a computer.
• In finance, luck is as much a force as risk.
7
Luck & Risk

8. What’s the
optimal
portfolio?
The optimal portfolio is one that
allows you to sleep at night.
It allows you to generate
reasonable returns, while also
maximizing your quality of life
and control over your life.
8

9. “
▸ People buy mansions and fancy cars
because they want respect and admiration
from others.
▸ What they don’t realize is that people don’t
admire the person with the fancy house or
car; they admire the object and think of
themselves having that object.
▸ So buying impressive items to gain
admiration and respect from others is a
fool’s pursuit – these things can not be
bought. 9
Man in the Car
Paradox

10. Reasonable > Rational
10
▸ “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’re not a spreadsheet, remember. You’re a person.

11. “▸ Few things matter more with money
than understanding your own time
horizon and not being persuaded by
the actions and behaviours of people
playing different games than you
are.”
11
What game are you playing?

12. Tails, You Win
“Long tails – the farthest ends of
a distribution of outcomes – have
tremendous influence in finance,
where a small number of events
can account for the majority of
outcomes.”
12

13. “
▸ A trap many investors fall into is what
Housel calls, “historians as prophets”
fallacy: an overreliance on past data
as a signal to future conditions in a
field where innovation and change
are the lifeblood of progress.
13
▸ Past performance is not indicative of
future results—the world changes.
Surprise!

14. No One’s Crazy
14
Everyone looks at money through the lens of their past
experiences.
 You can read what it was like to lose everything during,
say, The Great Recession, but you will never bear the
emotional scars of those who survived it and are now
afraid to invest again.
 It’s important to remember, then, that until you’ve lived
through a financial crisis and felt its consequences, you
will never understand why people behave the way they
do.

15. Leave room for
error
• If you want to be in the game for
the long run, you need to leave
room for error.
• “Room for error lets you endure a
range of potential outcomes, and
endurance lets you stick around
long enough to let the odds of
benefiting from a low-probability
outcome fall in your favor.”

16. Review
▸ Reading it will open your mind towards new
perspectives and have you conduct an
introspection to realize how biased you were all
along.
▸ It will surely give you a series of areas that you
can improve to see instant changes in your
financial life.
▸ The book is relatively short but packed with fun
and timeless financial lessons on how to deal
with money.
16

17. Thank
You