Be humble when things are going in the right direction;When things go in the wrong direction, be understanding or sympathetic.
This is because nothing is as good or bad as it seems. The world is big and complex. Luck and risk are real and difficult to tell, so keep this in mind when evaluating yourself and others. If you respect the power of luck and risk, it's easier to focus on what you really have control over, and it's easier to find the right referencing.
1.The less vanity, the more wealth
How much money you can save depends on the gap between your need to manifest yourself and your income, and wealth exists precisely where you can't see it.
So it can be said that by scaling back what you can buy today, you create the opportunity to buy more things or have more options in the future, and that's how wealth is accumulated.
No matter how high your income is, you will never be able to accumulate wealth if you can't limit your desire to spend money and enjoy it in the moment.
This tests your ability to resist and delay gratification.
2.Manage your money in a way that will make you sleep soundly
This is not the same as striving for the highest return on investment or keeping a percentage of income in the bank.
Some people sleep soundly only after getting the highest rate of return, while others sleep soundly only when they invest conservatively.
Everyone has their own preferences, but ask yourself, "Will this make me sleep soundly at night?"The answer can be used as a common criterion for judging whether a financial decision is suitable for you.
3.If you want to increase your return on investment, the easiest and most effective way is to stretch it out for a longer period of time
Time is the most powerful force in investing
It allows the small things to grow and the big mistakes to fade away. It doesn't counteract luck and risk, but it makes the results fairer for the participants.
4.Even if a lot of things go wrong, don't get out of balance
Even if you are half wrong, you can still accumulate wealth, because it is a few things that determine the overall outcome.
No matter how you're managing your finances, no matter how many things don't go as expected, there's no big deal. That's the way the world is.
Therefore, you should always measure your overall investment performance, rather than judging your performance based on the success or failure of a particular investment. It is perfectly acceptable to have a large bad sum and several excellent investments at the same time, and even in most cases the best situation.
Judging overall performance through individual investments can exaggerate the ingenuity of the winners and be overly critical of the losers.
5.Use your wealth to gain control over your time
Because the most serious and common deduction for the happiness of life is the lack of freedom in time.
The ability to do what you like with the person you like at any time, and to do it as long as you want, is the biggest dividend that wealth can bring you
6.More kindness, less luxury
No one else cares as much about how much wealth you have.
You may think you need a luxury car or a watch, but maybe what you really want is respect and appreciation.
You may be able to get these more easily through kindness and humility than by relying on luxury cars and watches.
7.Save money, just save it
You don't need any specific reason to save money.
Saving money for a car, a down payment, or a sudden illness is naturally good, but it's also one of the best reasons to save money for things that can't be ** or defined.
Everyone's life is made up of a series of accidents. In the worst moments of life, there is no specific purpose for a good saving that can provide a hedge against the inevitable unexpected.
In the face of possible "black swan" events, reserving reserves is the last guarantee to deal with the greatest risks.
8.Be clear about the price to pay for success
Be prepared to pay, because nothing of value is free, and good things are expensive!
Remember, most of the costs associated with managing money are unpriced.
Uncertainty, doubt, and regret are common costs in the financial world. They're usually worth paying for, but you want to see them as a fee (to pay for getting a good thing) rather than a fine (to avoid in every possible way).
9.Focus on fault tolerance
There is a distance between what may happen in the future and what you need to meet in order to perform well.
It is it that gives you resilience and allows compound interest to work wonders over time
Fault tolerance often looks like a conservative defense, but if it keeps you on the playing field, it can pay for your mistakes countless times.
Keeping a line in place and maintaining the right margin of safety can save you from a situation from which you will never recover.
10.Avoid setting extreme financial goals
Everyone's goals and aspirations change over time.
As you grow and improve personally, the more extreme your past decisions are, the more likely you are to regret them.
You should like risk because it can pay off in the long run. But you need to be extra sensitive to devastating risks, as it can leave you out of the market early and no longer have the opportunity to take risks that will give you a reward.
Treat everyone with respect. In the world of financial investment, people who are smart, knowledgeable, and thoughtful can have different opinions. Because different people's goals and aspirations are very different, there is no single right answer.
What's right for you is the best.
.Excerpt from The Psychology of Money