Don't Compete with anyone but yourself - The Psychology of Money Book Review

 

I will start with some Indian perspectives when it comes to Investing before reviewing this book which is nothing less than a 24K Gold. I believe all of us do invest money in some form or other. It can vary from Bank Fixed deposits, Government bonds, Stock market, Real Estate, or Gold. I believe the majority of Indians were conservative when it came to investing in the Stock market before the COVID wave hit in March 2020. Zerodha is currently India's biggest broking house. Zerodha's CEO Nitin Kamath made 2 important points when he was interviewed  on CNBC recently in July 2021. First - He was happy to announce that Zerodha has around 6 million subscribers and it has seen a record jump in the last 18 months. The second point - 99% of the new investors have not even earned more than FD returns in last 18 months. Now, that's a powerful point. Nitin Kamath was talking based on data points since he has data scientists who use tools like Big data and Machine Learning to come up with statistics.

In an era when everyone wants to be Mukesh Ambani overnight, this book teaches us that financial success has little to do with fulfillment in Life. The book uses short stories to convince us that soft skills are more important than the technical side of money. The best part is it does not give references to extreme examples like billionaires and CEOs who dominate the news. The focus is on common people who understood the power of compounding, people who understood the difference between getting wealthy and staying wealthy. We live in a YouTube era where we are bombarded with videos that talk about making 3 crores in 3 years with an investment of 5 lakhs. It is like receiving a welcome kit from HDFC bank (India's biggest private sector bank) only to find some gift vouchers from Laxmi Vilas Bank (Bankrupt) inside. The author relates to a quote from Warren Buffet which says "It is only when the tide goes out, you get to see who was swimming naked". Good investments are not necessarily about making good decisions. It's about consistently not screwing up.

Why I like this book - 

I believe success is a lousy teacher. It seduces smart people into thinking that they can't lose. Smart people do win consistently but when they lose most of them can't handle failure. Share Market is one place that will keep on challenging & beating your ego no matter how smart you are. Your mindset is important and the physiology of money exactly touches this aspect. While earning money is not at all a bad thing. The bad thing is at what cost? The author talks about few invaluable assets like Reputation, Freedom, Independence, Family, Friends & Happiness. Saving money is important & it is more important to know when it's time to stop taking risks that might harm your invaluable assets.