Morgan Housel: Take Smarter Risks and Build Lasting Wealth as an Entrepreneur | Finance | YAPClassic

Hala Taha (0:00)

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Morgan Housel (1:08)

What are you going to regret in the future? Are you going to regret not saving money? Are you going to regret saving too much money? The path to success often looks a lot like failure. If you'd start 10 businesses and nine of them fail and one is a success, that's a good outcome. It's true for stock picking as well. Most people have too much of their money in stocks and they should have less. And the reason why is the first rule of compound interest is to never interrupt it unnecessarily. Rather than trying to pick the best industry, pick a decent industry that you can stick with for another 10 or 20 years. And that's where the big money will be made.

Hala Taha (1:41)

How can we actually plan out what we want to spend our money on this year?

Morgan Housel (1:45)

One is figure out what if you can you will be among the top investors in the world.

Hala Taha (1:51)

What's up, Young and Profiters? Welcome back to another YAPClassic episode. Now, you guys are all tuning in to Young and Profiting because you want to grow your wealth. Well, our financial decisions are deeply intertwined with our emotions, more often than we realize. So you've got to understand the psychology of your relationship with money so you can avoid some big financial mistakes that most people make. No one is better at illuminating the connection between psychology and finance than Morgan Housel. Morgan is a former financial columnist for The Motley Fool and The Wall Street Journal and the best-selling author of books like The Psychology of Money. A quick request for anybody who's new here, don't be a stranger. Follow Young and Profiting so you never miss a conversation. Yes, that goes whether you're on YouTube or listening on audio. Now, here's the one and only Morgan Housel.

Morgan, welcome to Young and Profiting Podcast.

Morgan Housel (2:42)

Thanks so much for having me. Happy to be back.

Hala Taha (2:44)

Yeah, I'm happy to have you here. You were on the show about a year ago, and we had such an interesting discussion. We talked about all kinds of things, your backgrounds, the secrets to building wealth and staying rich, and some topics you discuss in your books.

Since then, you've been busy writing, recording podcasts, creating content. I thought today we could kick off the new year with a grab bag of things that you're thinking about now related to money, investing, and psychology. Does that sound good to you?

Morgan Housel (3:11)

Let's do it. I'm ready.

Hala Taha (3:12)

Okay, cool. Speaking of the new year, what do you think the top things are that we should do to kick off the new year right when it comes to our finances? Is there any sort of exercise that we should be doing in the beginning of the year to evaluate our strategy?

Morgan Housel (3:27)

I think there's a couple of things to keep in mind. One is the very well-known idea that has been tracked for many years that New Year's resolutions don't tend to hold up because if you need to do something new on January 1st that you are unwilling to do on December 31st, you're almost certainly not going to stick with it. There's this idea, I think it was brought up by Scott Adams, who created the Dilbert comic, where it's like goals over, you should have systems instead of goals.

One example of that is a goal is, I'm going to lose 10 pounds. That's a goal. A system is, I'm going to work out every day. That's a system. It's very different from a goal.

It's a much better and more efficient way to have a new habit to do something. I think if you do have an aspiration to have a new year's resolution, do it right now, in December. Do it before and come up with a system that you can actually stick with over the long run. And a system means that it probably should not be extreme. So if you have a system of like, I'm going to work out five hours a day, let's say, just using that as an example, you're not going to stick with it. And the financial equivalent would be like, I'm going to save half my paycheck. Well, you're probably not. It's probably not going to work. So the more realistic it is and the more systematic it is, rather than a goal, the higher the odds that you can stick with it. The other thing I would talk about here that I think is really important is, whenever you are thinking about your financial future, and let's call them goals if you want to, despite what I just said, I think what you really have to keep in mind is the idea of what are you going to regret in the future?