This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
I am always interested in learning more from experts who specialize in psychology and the interconnection between wealth, happiness and financial peace of mind. Often times, I find their insight spans far beyond simply shifting your mindset toward better financial decisions, and that’s exactly the case here.
Warding off financial follies: Author Morgan Housel recently published a book titled The Psychology of Money: Timeless Lessons on Wealth, Greed and Happiness. His most notable observations, or “rules for life” (and finances), are highlighted by the author of this article. Of the varied valuable takeaways, a few include:
📌“No one’s crazy” – In the case of your financial decisions, the unique experiences of your past shape the manner in which you handle money today, however crazy it might be. At the same time, the author here notes there may be exceptions to that notion.
📌Warren Buffett made 96.5 percent of his fortune after his 65th birthday – This is true, albeit slightly off-put by the compounded annual rate of return between his 65th and 90th birthdays. However, it serves good advice in showing the power of “getting rich slowly”, and building your wealth early.
📌Wealth is what you don’t see – Sure, the neighbor down the road might have a big, fancy house, but now that’s $2 million they no longer have in their pocket. As the article states, “Wealth is the part of your cumulative income that is not consumed.”
📌History doesn’t repeat itself – It can be similar (or rhyme), though, which is why carefully studying the past and taking it into consideration in the grand scheme of your financial plan is still helpful.
Broaden your baseline: It is beneficial for you to collect insights and consultation from multiple sources when it comes to retirement planning, and that doesn’t just mean from financial advice practitioners.