This post is part of the 📖 The Psychology of Money series.


Today, I am reading Nothing’s Free chapter from the book The Psychology of Money: Timeless lessons on wealth, greed, and happiness written by Author, Morgan Housel.

TL;DR! 💬

Doing well with money isn’t necessarily about what you know. It’s about how you behave. And behavior is hard to teach, even to really smart people.

In The Psychology of Money, award-winning author Morgan Housel shares 19 short stories exploring the strange ways people think about money and teaches you how to make better sense of one of life’s most important topics.


Yesterday, I finished reading the 14th short story You’ll Change from the book The Psychology of Money.

Nothing’s Free

Everything has a price, but not all prices appear on labels.

Everything has a price, and the key to a lot of things with money is just figuring out what that price is and being willing to pay it.

The question is: Why do so many people who are willing to pay the price of cars, houses, food, and vacations try so hard to avoid paying the price of good investment returns?

The answer is simple: The price of investing success is not immediately obvious. It’s not a price tag you can see, so it doesn’t feel like a fee for getting something good when the bill comes due. It feels like a fine for doing something wrong. And while people are generally fine with paying fees, fines are supposed to be avoided.

It sounds trivial, but thinking of market volatility as a fee rather than a fine is an important part of developing the kind of mindset that lets you stick around long enough for investment gains to work in your favour.

Key Takeaways

  • Stock market volatility is a fee, not a fine. Find the price and pay it.

That’s it for today. Tomorrow, we will read the next chapter You & Me, beware of taking financial cues from people playing a different game than you are.

What we learnerd so far
  1. No One’s Crazy

    Every decision people make with money is justified by taking the information they have at the moment and plugging it into their unique mental model of how the world works.

  2. Luck & Risk

    Nothing is as good or as bad as it seems. More important is that as much as we recognize the role of luck in success, the role of risk means we should forgive ourselves and leave room for understanding when judging failures.

  3. Never Enough

    There are many things never worth risking, no matter the potential gain. Knowing when you have “enough” is an invaluable skill. Building a sense for “enough” is remarkably simple: Stop taking risks that might harm your reputation, family, freedom and independence.

    Don’t forget that being loved by those “whom you want to love” is invaluable than risking everything for money.

  4. Confounding Compounding

    Good investing isn’t necessarily about earning the highest returns. It’s about earning pretty good returns that you can stick with and which can be repeated for the longest period of time.

  5. Getting Wealthy vs Staying Wealthy

    Good investing is not necessarily about making good decisions. It’s about consistently not screwing up. There are a million ways to get wealthy and plenty of books on how to do so. But there’s only one way to stay wealthy: some combination of frugality and paranoia.

    Getting money is one thing. Keeping it is another. If you have to summarize money success in a single word, it would be “survival”.

  6. Tails, You Win

    Gains come from a small per cent of your actions called “Long Tail Events”. You can be wrong half the time and still make a fortune. Remember, tails drive everything. Just do the average thing when all those around you are going crazy.

  7. Freedom

    Controlling your time is the highest dividend money pays. The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. It is the highest dividend money pays.

  8. Man in the Car Paradox

    If respect and admiration are your goals, be careful how you seek them. Humility, kindness, and empathy will bring you more respect than horsepower ever will.

  9. Wealth is What You Don’t See

    Wealth is hidden. It’s income not spent. Wealth is an option not yet taken to buy something later. Its value lies in offering you choices, flexibility, and growth to one day purchase more stuff than you could right now.

  10. Save Money

    Savings can be created by spending less. You can spend less if you desire less. And you will desire less if you care less about what others think of you.

  11. Reasonable > Rational

    You’re not a spreadsheet. You’re a person. A screwed up, emotional person. When it comes to investing, try to be reasonable rather than rational.

  12. Surprise!

    Don’t rely solely on history when predicting the future of the economy and stock market.

  13. Room for Error

    People underestimate the need for room for error in almost everything they do that involves money. The solution is simple: Use “room for error” when estimating your future returns.

  14. You’ll Change

    Long-term financial planning is essential. But things change—both the world around you and your own goals and desires. The trick is to accept the reality of change and move on as soon as possible. The quicker it’s done, the sooner you can get back to compounding.

  15. Nothing’s Free

    Stock market volatility is a fee, not a fine. Find the price and pay it. Convincing yourself that “market volatility is a fee, not fine” is an important part of developing the kind of mindset that lets you stick around long enough for investment gains to work in your favour.

Buy or not to buy

If you want to be wealthy and then stay at the totem pole forever, you must immediately read this book. I bought several copies of this book to gift friends and family. It’s an easy read with a lot of anecdotes and real-life lessons. I already implemented several hacks in my life whistle taking investment decisions.

The Psychology of Money

Author(s): Morgan Housel

Short Blurb: Doing well with money isn’t necessarily about what you know. It’s about how you behave. And behavior … Read more
Buy from Amazon

Part 17 of 23 in the 📖 The Psychology of Money book series.

Series Start | The Psychology of Money: Timeless lessons on wealth, greed, and happiness - Day 16 | The Psychology of Money: Timeless lessons on wealth, greed, and happiness - Day 18



Amazon Associates Disclaimer! 💬
As an Amazon Associate, I earn from qualifying purchases. I make a tiny commission if you buy using one of the links above at no additional cost to you. I use the money to buy another book 📖 to review or grab a beer 🍺 Super duper thanks 🙌