The Psychology of Money, with Morgan Housel

Afford Anything

Paula Pant | Cumulus Podcast Network

Entrepreneurship, Business, Investing

4.6 • 3.4K Ratings

🗓️ 15 September 2022

⏱️ 71 minutes

🔗️ Recording | iTunes | RSS

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Summary

#402: Do you wrestle with the idea of leaving your savings in an account earning next to nothing versus investing it in the stock market? Do you use investment strategies that allow you to work with your nature, rather than against it? Are you careful to seek investment advice from those who share your investment goals, or do you get caught up in the trends of day traders? Morgan Housel, author of The Psychology of Money, joins us to discuss why investing is not the study of finance, but the study of how people behave with money. Morgan is an award-winning financial journalist, former columnist for the Wall Street Journal and The Motley Fool, and one of the foremost thinkers in the world of investing. As a long-term investor who shares our buy-and-hold philosophy, Morgan has behavioral finance insights that can help us invest for financial independence with more clarity and a better understanding of ourselves. We discuss how to develop self-awareness around biases, the importance of flexibility for long-term strategies, saving like a pessimist and investing like an optimist, becoming durable in the face of market adversity, the key difference between patience and stubbornness (and how it affects your mindset), expectation management, the importance of bonds and emergency funds, and a difficult lesson about tail risks that Morgan learned at age 17. You’ll enjoy this episode if… You’re super Type A with your investment portfolio and have a hard time letting go of plans that didn’t work out You want to learn a framework that can help you roll with the inevitable punches of the stock market You feel behind and have no idea how to develop a sense of what ‘enough’ is You’re tired of trying to overcome your inherent biases and reactions to the market and want to try something different For more information, visit the show notes at https://affordanything.com/episode402 Learn more about your ad choices. Visit podcastchoices.com/adchoices

Transcript

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0:00.0	You can afford anything but not everything. Every choice that you make is a trade-off
0:12.9	against something else and that doesn't just apply to your money. That applies to your
0:16.1	time, your focus, your energy, your attention, any limited resource you need to manage.
0:21.4	And that opens up two questions. First, what matters most? And second, how do you align
0:27.0	your decisions accordingly? Answering those two questions is a lifetime practice. And that's
0:32.7	what this podcast is here to explore. My name is Paula Pat. I'm the host of the Afford
0:37.2	Anything Podcast. And we are currently on what we call the September sabbatical. If you
0:43.0	have been a long-time listener of this podcast, here's what we do. Every year we've done
0:48.0	this for the past at least three years, I think, during the month of September, we air
0:54.6	some of our favorite episodes from our archives. And we theme these four weeks of episodes
1:01.3	around the acronym F-I-R-E, which we've rebranded as financial psychology, investing, real estate
1:10.3	and entrepreneurship. This week, we're playing the letter I, investing, and from our archives
1:17.6	from more than 400 episodes that we've produced, one of our favorite, most insightful, most
1:25.6	educational interviews around the topic of investing was our interview with award-winning
1:32.4	financial journalist Morgan Howell. He's a former columnist for the Wall Street Journal
1:37.4	and the Motley Fool, the best-selling author of the book The Psychology of Money, and
1:42.0	one of the foremost thinkers in the world of investing. In this interview, we discuss how
1:47.7	to develop self-awareness around cognitive biases. We talk about saving like a pessimist
1:53.8	and investing like an optimist. We talk about how to be durable in the face of market
1:58.7	adversity, which is particularly relevant right now. Have you seen, you know what, actually
2:04.9	don't look at what the markets are doing right now? You're not going to like it. So we
2:10.5	talk about how to be durable in the face of that. We discuss the key difference between
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