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mardi 21 mai 2024

These are 20 lessons from the book the psychology of money? Reel story?luck versus risk?financial advice and taking action in your own financial life





These are 20 lessons from the book the


psychology of money that changed how i


think about money and hopefully it can


change yours too no one is crazy well i


mean some people are what we experience


makes up about point zero zero zero zero


zero zero zero one percent of what's


actually going on in the world and yet


it makes up like eighty percent of how.


we think the world works for instance.


when you see this you might think that


wow that was magic you didn't see that


it took like two and a half minutes to


actually make it happen i had to do a


bunch of takes but finally it actually


worked you just saw something cool and


even my bracelet changed


change.


oh there we go so when we see people


freak out and sell everything when the


market goes down or buy lottery tickets


we might think that that is a crazy


irrational decision no one's crazy if


you were in their shoes you might do the


same thing.


luck versus risk let's say that i go out


there i do some research and i buy a


stock and five years from now maybe that


stock either didn't grow at all or maybe


even lost money it's possible that when


i bought that stock i i made a bad


decision it's also possible that i made


the right decision and i just got some


bad luck there was stuff that is not in


my control that happened like this stock


could have had an 80 chance of making


money and it just so happened that i


landed on that 20 chance that it wasn't


gonna work out doesn't mean i made a bad


decision.


Not necessarily but it could also work


the other way where you just get some


dumb luck where you pick something that


was actually a bad decision and it ended


up working out for you this is something


that's really important when it comes to


listening to financial


advice and taking action in your own


financial life like for an example bill


gates happened to be in one of the only


schools that had a computer in his state


if that hadn't have happened maybe he


wouldn't be worth tens of billions of


dollars you never know how kind of risk


and luck are going to be involved in


your decisions and how it can completely


change everything.


Most of us have enough we have enough to


live on to have food to drink coffee to


have something to watch a youtube video


on but we always seem to push for more


power more money bigger house more


clothes nicer cars and yes i fall into


that trap as well where once i hit half


a million subscribers i'm hopefully


gonna get a tesla so don't forget to


subscribe but seriously we need to


realize when we have enough and right


now i do have enough that would be a


bonus that is completely unnecessary and


sometimes realizing that and that if we


can keep our needs few then we can have


enough a lot sooner than somebody else


and be content in our lives there are


some things that are just never worth


risking in order to get more things like


our reputation our freedom our family


and friends our happiness and the best


way to make sure that we can keep all


these things is not risking any of them


to have more than we need when we


already have enough


compound interest i'm gonna be honest


this is something that i struggle with


when we see somebody who's at the top of


their field whether that's in youtube in


business in investing in a relationship


we want kind of that end result but we


want it now and we don't see all of the


work and the years that went into that


for instance if you look at warren


buffett he started investing when he was


10 years old i don't know what you were


doing at 10 but i i wasn't investing and


by the time he was 30 he hit a million


dollars by the time he was 59 he hit 3.8


billion dollars and now he's worth


almost 100 billion dollars but if he had


started investing at 20 instead of at 10


that could have made an enormous


difference in how much he's worth today


a lot of times we look at the results


instead of looking at the compound


effects that went into it plan on the


plan not going according to plan as mike


tyson once said everybody has a plan


until they get punched in the face so


when we're making plans for our


financial lives we should have plans for


if those plans go terribly awry we


should have emergency funds we should be


aiming for probably having six months to


a year's worth of living expenses in


case things go wrong what happens if


there's a recession and you can't


withdraw your money from the stock


market what happens if there's a housing


crisis well we don't want to obsess


about all the negative things that could


happen in the world structure our


finances to be unbreakable be a pilot


of your findings there's an old saying


with pilots that being a pilot is hours


and hours of boredom punctuated by


moments of sheer terror a good


definition of financial genius is doing


the average thing when everybody around


you is going crazy freedom comes first


honestly i i couldn't agree with this


more that's what i talk about in


financial minimalism all the time it's


the idea that even doing something that


you love on a schedule that you hate or


with people that you hate can make it


feel like that's something that you hate


so even if you love your job right now


focusing on building freedom in your


life is what's really important because


what if in a year you get a terrible


boss or you hate your job or they try to


move you or they do something or you


hate your work environment or the


schedule they put you on we should be


focusing on building freedom like that's


why i quit the other jobs that i was at


where i could have made more money with


them but i didn't like the hours i


didn't like what i was doing so even


though for the first couple years i made


way less money i would rather have the


freedom and less money because all i


need is enough no one gives a


no one is as impressed by your material


stuff as you are like let's be honest


when you see somebody driving that cool


car you don't think that that person is


cool you think that the car is cool or


how cool you would look if you were


driving that car this is something that


i used to really struggle with where i


would always be focused on


my clothes my car what people thought


about me my job whatever it was and how


people perceive me when in reality no


one really cares they're just worried


about themselves so that's really


freeing because you don't need to spend


money on stuff you don't need to impress


people you don't even like i think


that's from fight club


[Applause]


be wealthy not flashy


when most people say that they want to


be a millionaire what they really mean


is they want to spend a million dollars


which is literally the opposite of being


a millionaire but most people judge how


successful they are on how much money


they spend how flashy their stuff is but


true success and true wealth is measured


in


freedom


be frugal shocker right building wealth


really has very little to do with how


much money that you make and almost


everything to do with your savings right


now a lot of people only save for


specific things they save for a house


they save up for a car for a vacation


whatever it is but he talks about how


important it is to save just for the


sake of saving you don't need something


that you're saving up for you're saving


up because that's what's gonna buy your


freedom that's what's gonna buy options


that's what's gonna buy memories is


saving money not to spend it and because


you know that stuff won't make you happy


never tell me the odds actually you know


the odds are quite interesting the odds


of making money in the stock market are


50 50 over one day 66


over one year 88 over 10 years and a


hundred percent over 20 years so this


just really shows the importance of


being in the market for a long time


taking advantage of that compound


interest and not freaking out when the


market goes down or trying to time it


but just trying to be in the market and


continually put more and more in over a


long period of time and that's how


you're like guaranteed to make money now


if you guys want to be guaranteed some


money you could sign up for weeble and


get up to 12 free stocks when you open


and fund a new account this is the main


app i use to invest and it's honestly


just free money so there's a link down


in the description we suck at telling


our own future


now most people stick with the job that


they chose when they were trying to go


to school at 18. but the odds of picking


a job that's gonna be fulfilling you're


gonna actually care about and enjoy


going to work and enjoy every day for


the next like 40 years are


astronomically low and that's because we


can't really tell what the future holds


i used to have five-year plans and ten


year plans and now i really don't plan


past about six months and if something's


really not fulfilling you


and you're just doing it because that's


what you've done in the past it's not


really a good reason to do it it might


be time to kind of make a shift and see


what you can change so that you're not


stuck doing this thing you don't like


doing for the rest of your life not all


prices are on the label like i said


earlier there's like a hundred percent


chance of making money if you invested


in the stock market over a 20-year


period of time and the historical


average is around 11 per year however


that money does not come free there is a


fee that you have to pay but that fee is


not money it is volatility and


uncertainty and this can be really


powerful to understand especially with


everything that's going on right now


when you see the market dip 20 and you


lose 20 of your money that can be really


scary unless you look at it as this is


the fee if i can stick through this this


is what's gonna make me money in the


long term as opposed to people who can't


handle it and they sell and get out of


the market like you have to realize that


that stress that uncertainty that worry


that is the price for the returns that


you're gonna make you are not


me that that's kind of obvious and


congratulations to you but we often look


at people giving financial advice and a


lot of it that even i've talked about


sometimes is very blanket this will


equal this like this will be a good


decision if you invest your money this


way it'll be a good decision that's not


necessarily true so we have to be very


careful who we listen to when you're


giving financial advice to an 18 year


old as opposed to a 30 year old who's


just starting a family as opposed to a


50 year old who's getting ready for


retirement


a decision that would be great for one


person would be a horrible decision for


somebody else to realize that i i'm not


you and the other people that you listen


to you have to take it with a grain of


salt and kind of adapt it to your


circumstances because every circumstance


is different so we all have to make


slightly different decisions the joker


was right some people just want to see


the world burn no like legit negativity


is what sells this is why i don't listen


to any news of any sort and i have no


idea what's going on in the world if


someone writes an article that the


market's gonna go up 50 next year


nobody will give a crap but if that same


person writes a very similar article


saying that the markets are going to go


down 50 next year everybody will start


losing their minds so when you're


watching the news or looking at


forecasts just realize that negativity


sells so take it all with a grain of


salt because you never know who's just


trying to make money off of negative


things happening and trying to hype them


up so that they can get more clicks it's


a bit of a scam


beware of your love of stories if you


dislike investing in the stock market or


you just like investing in real estate


or dislike starting a business you're


gonna find a story that kind of makes


sense with that narrative that you have


in your head you're gonna try to fill in


the gap this is called appealing


fictions if you think that the stock


market is gonna go down next year you


will find tons of things to support that


idea if you think it's going up you'll


probably find tons of things to support


that idea so it's actually really


important to not go into researching or


planning things or even having


discussions with people with a story or


an idea in mind already that you're


trying to draw things from other places


to match that story that you already


have going in your own head this happens


in politics all the time where somebody


will have one mindset and they will


surround themselves uh with people who


agree with that mindset and never take a


step back and ask if each side has


merits that there is some middle ground


with but honestly we just love our


stories less ego more wealth saving


money is the gap between your ego and


your income so wealth is created by


suppressing what you could buy today in


order to have more money and options in


the future so no matter how much you


earn you can't really start building


wealth unless you can practice delayed


gratification like it's just really


important to remember that wealth is


what you don't see you need to sleep at


night sometimes getting the highest


possible returns is not really what we


should be shooting for we should be


shooting for being able to sleep at


night and not stress about our finances


so when we're looking into investment


one of the questions that we should be


adding to the list will i be able to


sleep at night and if the answer is no


and it's gonna be a big stress on your


life then maybe you should look in a


different direction it's just it's just


not worth losing sleep over investing


doesn't have to be complex a lot of


people get overwhelmed with the options


that are out there when it comes to


investing you can do real estate a


business you have all these stocks like


thousands and tens of thousands of


stocks that you can choose from and


therefore they don't do anything because


it's too stressful and it doesn't really


need to be that complex he talks about


one of the simplest ways to start


investing and that is just to simply


open a roth ira and invest into low cost


index funds something like vtsax and


just continually putting money in it


every single month for the long term and


not worrying about the market because


again you're looking for that 20 years


down the road this might sound really


simple but it actually works stats show


that 85 percent of large cap active


managers didn't beat the s p 500 over


the decade ending in 2019 just putting


your money in the s p 500 and leaving it


embrace some risk some risk is good in


order to make money in the stock market


you have to put money into the stock


market and therefore take a risk yes it


could be safer to keep that money in a


savings account but if you don't take


that risk you are guaranteeing that you


won't get that reward so while it's


important to make sure that we avoid


risk that could actually like ruin our


lives taking a calculated risk on


something that has very good odds of an


upside is totally worth it and we can't


just not take action because there is


some risk involved now something that


has a very low risk and hopefully a very


large upside is actually subscribing to


this blog so if you haven't


subscribed already don't forget to do


that and i'll see you guys next week


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