Different people have different financial needs | The Psychology of Money by Morgan Housel
Book-1 | Lesson-5
“Bubbles form when the momentum of short-term returns attracts enough money that the makeup of investors shifts from mostly long term to mostly short term.”
“It’s hard to grasp that other investors have different goals than we do because an anchor of psychology is not realizing that rational people can see the world through a different lens than your own. Rising prices persuade all investors in ways the best marketers envy. They are a drug that can turn value-conscious investors into dewy-eyed optimists, detached from their own reality by the actions of someone playing a different game than they are.”
“Smart, informed, and reasonable people can disagree in finance because people have vastly different goals and desires. There is no single right answer; just the answer that works for you.“
It’s easy to get swayed by friends, family, and influencers who persuade you to make financial decisions they think are best. But that’s what worked for them during their times. One should always do their own research before making financial decisions as per the situation they are in and the goals they have.
So next time someone asks you to invest in Fixed Deposits or Bitcoin, do your own research as to why should you invest. FOMO is real, learn to handle it.
Start next book: Range by David Epstein
We share 1 lesson from a book of the week from Monday - Friday. Short notes, no spam. Reply to nominate a book of your choice. Invite your friends to subscribe:
An initiative by merrative.com - a community to discuss ideas from literature like books, news, articles, and research papers, together.