Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Fri, 14 Feb 2025
Morgan Housel made his first investment at 18, putting $1,000 into a certificate of deposit at his local bank. When he started earning interest on that saving, he was hooked. He dove into books on finance, investing, and wealth building, eventually becoming a financial columnist for The Motley Fool and The Wall Street Journal. In today’s episode, Morgan shares why he thinks personal finance is more like psychology than physics, some of the common emotional pitfalls that can derail your financial planning, and much more. In this episode, Hala and Morgan will discuss: (00:00) Introduction (05:49) Early Financial Experiences (09:05) The Life-Changing Ski Accident (16:17) Career at Motley Fool and Transition (18:07) Writing and Publishing Books (28:30) The Psychology of Money (32:09) Personal Financial Philosophy (36:53) The Purpose of Money (38:40) Emotional Pitfalls in Personal Finance and Investing (42:39) The Art of Keeping Wealth (44:40) Balancing Optimism and Pessimism in Business (51:21) The Long Tail Strategy in Investing (54:10) The Importance of Patience in Investing (01:00:10) Preparing for Unseen Risks (01:07:08) The Role of Stress and Incentives in Success (01:12:05) Permanent vs. Expiring Information Morgan Housel is a partner at The Collaborative Fund. He's the author of the bestselling book The Psychology of Money. He is a two-time winner of the Best in Business Award from the Society of American Business Editors and Writers, and winner of the New York Times Sidney Award. In 2022, MarketWatch named him one of the 50 most influential people in markets. He serves on the board of directors at Markel. Resources Mentioned: Morgan’s Podcast: youngandprofiting.co/3ELHGYl Morgan’s Book, Same as Ever: youngandprofiting.co/4jZGalU Morgan’s Book, The Psychology of Money: youngandprofiting.co/4gIFP3U Episode Sponsors: Shopify - Sign up for a one-dollar-per-month trial period at youngandprofiting.co/shopify Airbnb - Your home might be worth more than you think. Find out how much at airbnb.com/host Rocket Money - Cancel your unwanted subscriptions and reach your financial goals faster with Rocket Money. Go to rocketmoney.com/profiting Indeed - Get a $75 job credit at indeed.com/profiting RobinHood - Receive your 3% boost on annual IRA contributions, sign up at robinhood.com/gold Factor - Get 50% off your first box plus free shipping when you use code FACTORPODCAST at factormeals.com/profiting50off Active Deals - youngandprofiting.com/deals Key YAP Links Reviews - ratethispodcast.com/yap Youtube - youtube.com/c/YoungandProfiting LinkedIn - linkedin.com/in/htaha/ Instagram - instagram.com/yapwithhala/ Social + Podcast Services - yapmedia.com Transcripts - youngandprofiting.com/episodes-new Entrepreneurship, Entrepreneurship Podcast, Business, Business podcast, Self Improvement, Self-Improvement, Personal development, Starting a Business, Strategy, Investing, Sales, Selling, Psychology, Productivity, Entrepreneurs, AI, Artificial Intelligence, Technology, Marketing, Negotiation, Money, Finance, Side hustle, Mental Health, Career, Leadership, Mindset, Health, Growth Mindset, Finance, Personal Finance, Scalability, Investment, Financial Freedom, Risk Management, Business Coaching, Finance Podcast, Finance, Financial, Personal Finance, Stock Market, Scalability, Investment, Risk Management, Financial Planning, Business Coaching, Finance podcast, Investing, Saving
Chapter 1: Who is Morgan Housel and what is his background?
Young Improfiters, money is a mind game. Our financial decisions are deeply intertwined with our emotions, more so than we often realize. That's why recognizing the psychological aspects of our relationships to money can help us avoid some significant financial missteps. And there's nobody who's better at illuminating this connection between psychology and finance than Morgan Housel.
Morgan is a former financial columnist for The Motley Fool and The Wall Street Journal. He's the author of books like The Psychology of Money, and he was my guest earlier this week on the podcast. It was his second time on the show, and he had so many wonderful insights that I couldn't help but give you a second helping in this Yap classic.
In my first conversation with Morgan Housel, he talked about some of the emotional pitfalls related to money, the skiing accident that changed his life, and why the biggest risks are the ones that you don't see coming. He also shared some secrets for staying rich, along with the underappreciated trait of Warren Buffett that he thinks we all should emulate.
If you want to find out what that is, let's dive in. Here's my interview with Morgan Housel. So I'm going to cut straight to the chase. You are a master of many trades. You're a best-selling author, investor, you're even a podcaster. So how do you define what you do today?
It's such a good question. I would say I don't. I've never tried to put myself in a box. And I think I've moved around over the years. I think if you asked me that question 10 years ago, I would have said, I'm an investor who writes. And maybe if you asked me today, I would say I'm a writer who invests. Like I've just switched around what I enjoy doing.
And it used to be that all of my emphasis and research and enjoyment was investing. I want to scour the world and study investing history and whatnot. And I still love that. I'll always do that. But the art of storytelling really bit me 10 or 15 years ago. And that's what I've really find joy in doing now. And that's the craft that I want to hone.
And I think jumping around like that has been really important. If you just put yourself in a box and say, I am a blank. you're cutting off so much of the world that you might find enjoyment in and have some talent in doing.
Yeah. And when did you first get interested in finances as a young man?
I think I was 19 when I first stumbled across investing. I've told the story before, but it'll always stick with me. When I was 18, my grandparents gave me $1,000 and I put it in a CD at the bank, certificate of deposit, where it earned interest. And I think I intuitively knew what interest was, but I didn't really get it.
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Chapter 2: What early financial experiences shaped Morgan Housel's perspective?
Well, I think Bill Gates is the best example of someone who has gotten optimism and pessimism to coexist. Because when he started Microsoft in the 70s, he took the most optimistic swing that any entrepreneur has ever taken. When in the 70s, he said, every desk in the world needs a computer on it. That was the craziest idea in the world. Crazy optimism.
At the same time, from the day he started Microsoft to the day he left in 2000, he ran it as conservatively as you possibly could. He said he always wanted enough cash in the bank so that he could run Microsoft for one year with no revenue. Like the most pessimistic way to run a business. I think that's why they've done so well.
It's not that they're always optimistic or they're always pessimistic. They realize that if you can survive all the uncertainty and all the upheaval, then you have a fighting chance to actually compound for 50 years as they have. And very few businesses are actually like that.
If you have a very optimistic CEO, they're like, let's bury ourself in debt and invest every penny that we have and swing for the fences. And nine out of 10 of those businesses are eventually going to go bankrupt, probably pretty soon. But also if you're too pessimistic, then those businesses become obsolete.
So it's getting both of those at the same time that is so rare, but that's really the key to doing well over your entire career, over an entire lifetime, is getting optimism and pessimism to coexist.
We'll be right back after a quick break from our sponsors.
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