Investing is a combination of financial acumen and behavioural skills. While there are several books and blogs devoted to the former, The Psychology of Money focuses on the softer skills around investing. As Housel points out early in the book, investing is one area where a formal education and a person’s connections do not matter much.
Housel has divided the book into short chapters and eighteen of them highlight a particular lesson for investing. These vary from recognising the role of luck, long tails in investing and keeping a margin of error to distinguishing between being reasonable versus rational and understanding that different motivations drive different investors. He supports many of his main themes with interesting anecdotes related to the economy or to famous people. But ultimately, this book is not just about investing — there are life lessons that he imparts as well such as the need to save and to know when you have enough.
This is a short book, but Housel is still unable to avoid repetition, especially within chapters. He sometimes takes several paragraphs to make the same point in different ways. But I guess he would have needed to get to a minimum size for this book to be recognised as one! Having said that, it is an easy read. Also, while some of the insights that Housel provides are extremely compelling, others are self-evident. I would recommend this book particularly to young people starting their careers as a guide to manage their money and avoid the behavioural pitfalls that many of us fall prey to (they will find the last chapter quite useful). But it will also be a good read for older folks, helping them recalibrate their financial goals.
Pros: Thoughtful, easy read, useful guide for young people
Cons: Some repetitive points, some self-evident insights
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