You're referring to "The Psychology of Money" by Morgan Housel.
"The Psychology of Money" is a book written by Morgan Housel, a partner at The Collaborative Fund, a venture capital firm. The book was published in 2020 and has since become a bestseller.
The book explores how people think about money, and how their thoughts and behaviors around money are often influenced by psychological biases and heuristics. Housel argues that understanding the psychology of money is just as important as understanding the technical aspects of finance, such as investing and budgeting.
Here are some key takeaways from the book:
- Wealth is what you don't see: Housel argues that true wealth is not just about the money you have, but also about the money you don't have to spend. For example, having a low-cost lifestyle or being able to afford not to work can be a form of wealth.
- The biggest investment risk is not the market, but yourself: Housel suggests that the biggest risk to your financial well-being is not the stock market or economic downturns, but rather your own emotions and behaviors, such as panic selling or overconfidence.
- Long-term investing is not about being right, but about being persistent: Housel emphasizes the importance of having a long-term perspective when it comes to investing, and being willing to ride out market fluctuations.
- Your personal experiences with money shape your views: Housel notes that people's experiences with money are highly individualized, and that these experiences can shape their views on money and influence their financial decisions.
- The power of compounding is not just about money, but also about time: Housel highlights the importance of starting to save and invest early, as the power of compounding can have a significant impact on your financial outcomes over time.
Some of the key psychological concepts explored in the book include:
- Confirmation bias: The tendency to seek out information that confirms our pre-existing views, rather than challenging them.
- Loss aversion: The tendency to fear losses more than we value gains.
- Anchoring: The tendency to rely too heavily on the first piece of information we receive, even if it's irrelevant or unreliable.
- Hindsight bias: The tendency to believe, after an event has occurred, that we would have predicted it.
Overall, "The Psychology of Money" offers a unique perspective on personal finance, highlighting the importance of understanding the psychological factors that influence our financial decisions.