00:00 You know what if I were younger? I would start my own business now, I'm too old for that.
00:10 I couldn't start a successful business, because I'm not as smart as I used to be. I can't
00:15 get that job since I don't have a diploma. I've always wanted to create a business, but
00:21 unfortunately, I don't have the time for it. Of course they chose him instead of me, he
00:26 was one of the smartest boys in our school. You know what I studied in a small town where
00:31 the quality of education was not very good, so I couldn't receive a good education does.
00:37 Any of these sound familiar to you? I'm sure you've heard them many times. Find out what
00:43 Morgan Housel has to say about this behavior in his book, The Psychology of Money. Are you
00:49 curious about how luck and risk can impact your financial success? Do you want to learn
00:55 how to make the most of your money? By understanding the psychology behind it, look no further
01:00 than the three lessons I'm about to share, which come from Morgan Housel's book. I've
01:05 already shared 17 other lessons from this book in a previous video. The book offers
01:11 valuable insights into the role of luck and risk in building wealth. Becoming a millionaire
01:17 is often seen as an impossible task for those from poor backgrounds. However, with the right
01:23 combination of luck and risk, it is possible to become and stay wealthy. In this video,
01:29 we'll explore the top three lessons from the book, which will help you understand how
01:33 to take calculated risks and make informed financial decisions. So subscribe to the channel,
01:40 and let's get started. First thing first, why are people often afraid to make decisions,
01:45 especially when it involves taking risks? It's true that making decisions often requires
01:50 people to take risks. And that can be a scary proposition. People may fear the unknown,
01:57 worry they will make the wrong decision, or simply feel overwhelmed by the number of choices
02:02 they have. The author mentions in the book that luck and risk are two factors that can
02:07 significantly impact a person's life, both positively and negatively. Luck is often defined
02:14 as an unpredictable force that can influence the outcome of events. While risk is a potential
02:20 threat or danger that arises from an action or decision, both luck and risk play a crucial
02:26 role in many areas of life, especially when it comes to financial success. Let's talk
02:32 about the first of the three lessons about money from the book states that financial
02:36 success is not only about having technical skills, but also understanding soft skills,
02:42 such as luck risk, and the concept of enough. The author explores the role of luck and risk
02:48 in building wealth. He says that while luck can certainly play a role in financial success,
02:54 it is often the result of taking calculated risks and making informed decisions. One example
03:00 of this is the story of self made millionaire and best selling author David Bach. David
03:05 took a significant risk early in his career, when he decided to leave his job as a financial
03:11 advisor and start his own financial planning firm. He had no clients, no office, and no
03:17 guarantee of success. However, he believed in his vision and was willing to take the
03:22 risk Bach's gamble paid off. His financial planning firm became hugely successful, and
03:29 he went on to write several best selling books on personal finance. We can see that while
03:34 luck certainly played a role in Bach's success, it was his willingness to take a calculated
03:39 risk that set him on the path to financial success. The author also discusses the concept
03:45 of taking risks and knowing when enough is enough. He says that taking calculated risks
03:51 is important for building wealth, but it is also crucial to know when to stop and avoid
03:56 becoming obsessed with always wanting more. As an example, we have the story of John Paul
04:02 DeGioia, the co-founder of the hair care company John Paul Mitchell Systems, and the tequila
04:08 brand patron DeGioia, had a difficult upbringing and was homeless at one point in his life.
04:15 However, he eventually went on to build a hugely successful business empire. Despite
04:20 his success, DeGioia became obsessed with the idea that there was always something more
04:26 he could get. He took on too much debt, and invested in several other ventures ultimately
04:32 leading to his downfall. He lost everything and had to start from scratch. Howell Sell
04:38 emphasizes the importance of understanding the potential risks involved in any financial
04:43 decision. Taking risks without assessing potential consequences can lead to failure and financial
04:50 losses. While taking risks is important, it's also essential to know when enough is enough,
04:56 it's easy to become obsessed with always wanting more. But this mentality can lead to financial
05:03 ruin. Instead, it's important to have a clear understanding of one's financial goals,
05:08 and to be content with what has already been achieved. However, by understanding the potential
05:14 risks and rewards of any financial decision, you can make informed choices that lead to
05:20 long-term financial success. Music, the next topic about money from the book,
05:25 The Psychology of Money is about paying the price is a necessary part of achieving financial
05:31 success. L emphasizes that paying the price is a necessary part of achieving financial success.
05:38 This means that in order to build wealth, you must be willing to make sacrifices in the present
05:44 for the sake of your future financial goals. He offers the example of Warren Buffett, who famously
05:51 lived a frugal lifestyle and saved diligently throughout his life. Buffett understood that in
05:57 order to achieve his long-term financial goals, he would need to make sacrifices in the present.
06:03 By living below his means and investing wisely, he was able to build one of the largest fortunes
06:09 in the world. You may already know that Warren Buffett is one of the wealthiest businessmen
06:14 in the world, is known for his simple and frugal lifestyle. Despite his enormous wealth,
06:20 he lives in a modest home in Omaha, Nebraska, which he purchased for $31,500 in 1958,
06:29 and drives an inexpensive car. He is also known for his love of fast food, and often starts his
06:35 day with a cheap breakfast from McDonald's. You may be wondering why one of the wealthiest people
06:40 in the world often eats breakfast at McDonald's, when there are so many healthier options. We can
06:46 discuss this in the next video, but the point is Buffett's frugal habits extend beyond his personal
06:53 life. He also keeps a tight rein on expenses at his company Berkshire Hathaway, and is known for
06:59 avoiding unnecessary spending on things like executive perks and corporate jets. In interviews,
07:05 Buffett has shared his advice. For living a frugal life, he recommends buying less home than one can
07:11 afford, considering a 30-year mortgage, and holding onto cars for as long as possible. To save money,
07:19 he also advises against spending money on expensive hobbies or luxuries, and instead
07:24 focusing on things that bring value and joy to one's life. Overall Buffett's frugal lifestyle
07:31 has been an important factor in his success as an investor. By living below his means,
07:36 and avoiding unnecessary expenses, he has been able to save more and invest wisely,
07:43 and build an enormous fortune over the course of his career. On the other hand, the author
07:48 emphasizes the importance of investing early in life. He said that the earlier one begins investing,
07:54 the more time their money has to compound and grow over time. This can lead to significant
08:00 wealth accumulation over the long term. The author also talks about the benefits of passive investing.
08:07 During times of inflation, during periods of high inflation, active investing strategies can be
08:13 risky and may not yield the desired returns. So he recommends a passive investment approach,
08:19 such as investing in low-cost index funds or exchange-traded funds, ETFs. He explains that
08:26 passive investing allows individuals to diversify their investments and minimize their exposure to
08:33 market volatility. By investing in a broad range of stocks and bonds, individuals can reduce their
08:39 risk and increase their chances of long-term financial success during times of inflation.
08:45 He recommends investing in assets that have historically performed well in such conditions,
08:51 such as gold real estate or treasury inflation-protected securities. It is very important
08:57 to understand that anyone can achieve financial success, but this will only happen if you are
09:03 willing to pay the price, which could mean reducing discretionary spending, working longer hours to
09:10 earn more money, or investing in your education or career development. While paying the price may
09:16 be difficult, in the short term, the long-term rewards are well worth it. By making sacrifices
09:22 now, you can achieve financial independence and enjoy a more secure future overall. Living below
09:28 your means today can lead to a brighter financial future tomorrow. Moving on to the next one of the
09:35 three lessons about money from the book, the psychology of money says getting rich requires
09:40 taking risks and being optimistic, but staying rich requires the opposite. Morgan Housel says
09:47 that getting rich often requires taking risks and being optimistic, however he also notes that
09:54 staying rich requires the opposite avoiding unnecessary risks and being realistic about
10:00 the potential downside of investments. One example of a wealthy person who lost all of their fortune
10:06 is A.K. Batista, a Brazilian entrepreneur who was once one of the world's richest people. Batista
10:13 made his fortune in the mining and oil industries, but his empire began to crumble in 2012 when his
10:20 flagship company OGX filed for bankruptcy. Over the next few years, Batista's other companies
10:28 also struggled and he eventually declared bankruptcy himself. In 2018, Batista's downfall
10:35 was due in part to his overconfidence and willingness to take on excessive risks.
10:40 He often made bold predictions about the future of his companies and invested heavily in untested
10:46 technologies and ventures. When these bets did not pay off, his entire empire began to unravel.
10:53 The lesson from Batista's story is that even the wealthiest and most successful people can make
10:59 mistakes and suffer major losses to stay rich over the long term. It is important to be cautious
11:06 and realistic about investments and to avoid taking on excessive risks that could lead to
11:12 financial ruin in his book. Morgan Housel also mentions that what is considered crazy in terms
11:18 of financial decisions is subjective and varies among individuals. This means that one person's
11:25 risky investment may be another person's smart move depending on their personal circumstances,
11:31 risk tolerance, and financial goals. However, he also notes that there are certain financial
11:37 decisions that are more likely to lead to negative outcomes such as taking on excessive debt,
11:43 investing in speculative assets, or failing to diversify one's portfolio. These decisions may
11:50 seem rational or even necessary at the time, but they can have disastrous consequences in the long
11:56 run. This was evident during the 2008 financial crisis when many people lost everything due to
12:03 risky investments over leveraging and other financial missteps. Some investors had put all
12:10 of their savings into a single asset class or company, while others had borrowed heavily to
12:16 invest in real estate or other speculative ventures when the market crashed they were left.
12:21 With nothing and faced years of financial hardship, the lesson from the 2008 crisis
12:28 is that even seemingly safe or rational financial decisions can become crazy in the face of
12:34 unexpected events or market turbulence. To avoid such outcomes, it is important to be cautious
12:40 and realistic about investments, to diversify one's assets, and to avoid taking on excessive
12:46 debt or leverage by taking a measured and balanced approach to finances. Individuals can protect
12:53 themselves from the worst case scenarios and achieve long-term financial security. Now,
12:59 what is the perfect recipe for success? Some people believe that success is simply a matter of luck,
13:05 but the truth is that it often involves taking calculated risks. In fact, many successful people
13:12 have achieved their goals by taking risks and making bold decisions. However, taking risks
13:18 without assessing potential consequences can lead to fail failure and financial losses. On the other
13:24 hand, luck can play a significant role in financial success. For example, being in the right place at
13:31 the right time meeting the right people, or even winning the lottery can all be considered lucky
13:36 breaks that can lead to financial gain. However, relying solely on luck is not a reliable strategy
13:44 for building wealth. The key to achieving financial success lies in finding a balance between taking
13:50 calculated risks and being open to seizing opportunities that come your way. It's also
13:56 essential to have a solid understanding of the potential risks involved in any financial decision
14:02 and to be prepared to mitigate those risks. Overall, luck and risk are two factors that can
14:09 impact a person's financial success. While luck can sometimes play a role in achieving financial
14:15 gain, taking calculated risks and making informed decisions is often a more reliable strategy for
14:22 building wealth. By understanding the potential risks and rewards of any financial decision,
14:28 individuals can make sound choices that lead to long-term financial success. The book,
14:34 The Psychology of Money by Morgan Housel, provides valuable insights into the complex and often
14:41 unpredictable nature of personal finance. Through real-world examples and research-backed analysis
14:47 Household highlights three key lessons that can help individuals make smarter and more successful
14:53 financial decisions. The importance of humility and avoiding overconfidence, the value of time
15:00 and long-term thinking, and the need for balance and diversification in investments. By embracing
15:06 these lessons and incorporating them into their financial strategies, individuals can improve
15:12 their chances of achieving long-term financial stability and success, whether it's avoiding
15:18 excessive debt, investing in a diversified portfolio, or simply prioritizing long-term
15:25 goals over short-term gains. The principles outlined in The Psychology of Money can help
15:31 anyone take control of their finances and build a more secure future. I would like to say something
15:37 that I think is obvious. I am not a financial advisor or an expert in economics. I honestly
15:44 don't know what's going to happen to the stock market like everybody else. I sincerely hope this
15:49 video has been helpful to you now if you want to know the 17 lessons. About money I recommend you
15:57 watch this video next. Do not hesitate to share this video with people you know who want to know
16:03 what is happening in the economic world. Subscribe to the channel and share your thoughts on today's
16:09 video. Thanks for watching and I'll see you in my next one foreign.
