Excerpts from The psychology of money: Morgan Housel.
1. Do the actions we take around our decisions on money depends on our knowledge about finance?
2. How do we change our decision making process around money which is based on our past experiences.
3. Luck and risk - what role do they have in our success or faliure?
4. Why should we not copy the actions of one individual?
5. How to formulate your own recipe for success?
Our actions around money are largely dependent upon how we have grown up in our family and in our economy.
With same amount of information two individuals would react differently to situation. A person born in poor family may give higher weightage to saving plan than a person who is used to getting all riches in life
People reaction to stock market largely depends on the phase of the stock market which they have seen closely.
Though it is difficult to change our behaviour around money, but getting to know about, understanding the reasons behind our behaviour and reading about the practices which have yielded results most of the time in the past can help us change our behaviour.
People who don't acknowledge role of luck and risk in our lives are missing a part of the puzzle. Are the people who are successful are just the result of right decision and right skills? Are the people who have not got the result they desire are poor decision maker or Lazy?
Not all sucess is due to hard work and not all poverty is due to laziness.
We can't quantify this equation but luck and risk always play a part. Bill Gates, Waren Buffet were doing the right things at the right time and they got lucky to be successful. There was one more kid named Kent Evans working with Bill Gates in early years who was equally or more tallented than Gates, but he couldn't make it because he died in mountaineering expedition which had very little risk of life.( One in million)
When we study just one individual and try to copy his actions to become successful in that field we might not get the same results as he has got. The reason being both situations are different and it's difficult to separate out what was mere luck or risk and what was dependent on the decision making and right skills.
So what do we do to build our own recipe. The answer lies in studying a greater set of data, so that we can distill out the right set of skill and decision making process which generally results in success. It means focussing less on individuals or specific case studies and relying more on broad patterns.
Even then after doing all things right remember to give due respect to luck and risk and thank the universe for making you lucky. Bhagvat Gita teaches us to focus on the deeds and not the results. It's the journey that matters more than the peak of the mountain 🏔️. Reaching the peak is not entirely in your hand.
Would love to get your comments on it!!