The Savings Expert: “Do Not Buy A House!”, How To Turn £100 Into £1.5m Without Effort: Morgan Housel
Nov 6, 2023
01:57:12
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Steven Bartlett sits down with Morgan Housel, financial expert and author of 'The Psychology of Money'. They discuss topics such as the importance of control and freedom for happiness, the games society plays with money, why renting your home can be beneficial, and the impact of financial crises. They also delve into personal growth, the double life of billionaires, the cost of a stressful job on health, and the long-term effects of slow habits. This insightful conversation provides valuable perspectives on money and life.
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Quick takeaways
Having control over your finances and the ability to make independent choices about where you live, work, and retire is crucial for building wealth and finding happiness.
Instead of focusing on trying to beat the market or making risky investments, it is better to prioritize saving and developing the endurance to sustain your investments over a long period of time.
Trying to predict future market trends and risks is nearly impossible, as the biggest threats often come as surprises. It is better to focus on being prepared for any outcome rather than trying to predict and react to every potential risk.
Real-life examples, such as the story of Ronald Reed, a janitor who accumulated a fortune by patiently investing in stocks over many decades, demonstrate the power of endurance and simplicity in wealth-building.
The best story wins in entrepreneurship, investing, pitching, and sales. It's not about the facts, stats, or accuracy of the information presented, but rather the ability to tell a compelling story that resonates with people.
Deep dives
Importance of Independence and Control
Having control over your finances and the ability to make independent choices about where you live, work, and retire is crucial for building wealth and finding happiness.
The Value of Saving and Endurance
Instead of focusing on trying to beat the market or making risky investments, it is better to prioritize saving and developing the endurance to sustain your investments over a long period of time.
The Unpredictability of Risk and the Importance of Preparedness
Trying to predict future market trends and risks is nearly impossible, as the biggest threats often come as surprises. It is better to focus on being prepared for any outcome rather than trying to predict and react to every potential risk.
Lessons from Real-Life Examples
Real-life examples, such as the story of Ronald Reed, a janitor who accumulated a fortune by patiently investing in stocks over many decades, demonstrate the power of endurance and simplicity in wealth-building.
The Power of Stories
The best story wins in entrepreneurship, investing, pitching, and sales. It's not about the facts, stats, or accuracy of the information presented, but rather the ability to tell a compelling story that resonates with people. Storytelling is a powerful tool to captivate and engage an audience, whether it's through documentaries like Ken Burns' work or comedy performances. The stories that catch people's attention and connect with their emotions are the ones that leave a lasting impact.
The Influence of Dangerous Stories
While storytelling can be powerful, it's important to recognize the influence of dangerous stories. These are narratives that tell people what they want to hear, even if they are false or harmful. Donald Trump's anecdotal story about a friend and a vaccine needle exemplifies how a vivid and emotionally charged story can sway opinions, despite contradicting scientific evidence. People's inclination to listen to stories that align with their beliefs can lead to them disregarding accurate information and perpetuating harmful ideas.
Separating Lifestyle and Financial Decisions in Homeownership
Buying a house should primarily be viewed as a lifestyle decision rather than a purely financial investment. The historic track record of home prices adjusted for inflation shows limited growth in value over time. People should consider their personal circumstances, such as the need for stability, raising a family, or having a secure home base, when deciding whether to buy a house. Focusing solely on the financial returns can lead to poor decisions, especially if it involves borrowing a significant amount of money for an investment that may not provide significant returns.
The Power of Having a Big, Scary Goal
Having a big, scary, and terrifying goal is crucial for maintaining motivation and hunger for success, especially after achieving some level of wealth or success. It is dangerous when individuals don't recognize their decreased motivation and hunger and attempt to start new ventures unnecessarily. The examples of Elon Musk buying Twitter and billionaires starting rocket companies highlight the importance of constantly seeking new challenges to stay engaged and driven.
The Perils of Success and the Constant Hunger for More
Highly successful individuals, such as billionaires, are driven by an insatiable hunger for more and often continue to push themselves relentlessly, even when they have already achieved significant wealth. Despite outward appearances of success and happiness, many of these individuals are actually tortured by the problems they are trying to solve and wake up every morning with an intense drive to overcome challenges. This drive stems from a deep internal need for competition and the pursuit of ever-greater achievements.
Will money make you happy? How much is really enough? And how much should you save? Too often people don’t have the answers for the biggest financial questions in life, until now.
In this new episode Steven sits down with world-renowned financial expert and best-selling author, Morgan Housel.
Morgan Housel is a partner at the Collaborative Fund, a leading venture capital firm with a focus on technological companies. He is also the author of the book, ‘The Psychology of Money’, which has sold over 4 million copies. MarketWatch named him as one of 2022’s 50 most influential people in financial markets.
In this conversation Morgan and Steven discuss topics, such as:
How happiness is being in control and having freedom
Why a lack of control can make your life crumble
Why nobody actually cares about your material possessions
The money games being played in society
Why you should rent your home until you have kids
His mission behind writing about money
Why your relationship with money defines you
How to gain introspection about your life and finances
The randomness of financial crises
Why you should have a deathbed perspective on work and savings
How embrace failure can lead to huge successes
The double life of billionaires: wealth and pressure
The cost of a stressful job on health
Why bad news travels faster
Why growth comes from challenges and disasters
How growth comes with stress and uncertainty
Slow habits and their long term effects
How personal tragedies shape life goals
Why you should balance wealth with wellbeing
Staying patient despite market upheavals
The need for big, terrifying goals in business.
The difference between being rich and feeling wealthy.
Why a rising income doesn’t lead to happiness
The meaning of authentic success
You can purchase Morgan’s most recent book, ‘Same as Ever: Timeless Lessons on Risk, Opportunity and Living a Good Life’, here: https://amzn.to/467d77x
If you enjoy hearing about how to master the world of finance, I recommend you check out my conversation with Ramit Sethi, which you can find here: https://www.youtube.com/watch?v=ORqd9QAC8OY
