By Ben Dolan
I’m re-reading The Psychology of Money by Morgan Housel. Each year there are countless books published on the topic of personal finance, but Housel’s work, published in 2020, stands out from the rest. It’s a quick read and excludes perplexing financial jargon.
Housel begins with a basic premise: “doing well with money has little to do with how smart you are and a lot do with how you behave. And behavior is hard to teach, even to really smart people.”
He’s right about this. Our firm works with a lot of physicians (and we love our physician clients!). They are well-educated, highly intelligent individuals. For every excellent physician prospect we meet, there is one well-educated, highly intelligent physician we can’t help. The reason is simple: their behavior won’t allow them to accumulate wealth. They have too much debt, spend too much, and save too little. Unless they change their behavior, they’ll struggle to get ahead.
Below are a few insights from the book I think you’ll enjoy:
Compounding Returns – “good investing isn’t necessarily about earning the highest returns, because the highest returns tend to be one-off hits that can’t be repeated. It’s about earning pretty good returns that you can stick with and which can be repeated for the longest period of time. That’s when compounding runs wild.” Pg 53
Greed – “It gets dangerous when the taste of having more – more money, more power, more prestige – increases ambitions faster than satisfaction.” Pg 41
Financial Freedom – “Money’s greatest intrinsic value – and this can’t be overstated – is its ability to give you control over your time. To obtain, bit by bit, a level of independence and autonomy that comes from unspent assets that give you greater control over what you can do when you can do it.” Pg 84
Savings – “building wealth has little to do with your income or investment returns, and lots to do with your savings rate.” Pg 103
Some excellent lessons here. I highly recommend picking up a copy of The Psychology of Money and passing it around to family members. Also, contact us to learn more!