Morgan Housel: Get Rich, Stay Rich
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Not having formal is the single most important financial skill. I think it's so important that you cannot ever imagine accumulating significant ant wealth over your lifetime. If you are acceptable, the formal they give.

There's lardy one thing like one traiter that you want going to accumulate wealth is the lack of mal. Why do index work? So two reasons. One is it's always going to be the case that a very small number of stocks account for the majority of returns. The other is, I think the whether it's like an investing debate or a saving or spending debate, they are not a debate because people with different personalities talking over each other. And once you come to terms with that, but there's not one right answer for any of this.

what is the difference being rich?

Rich is when you have enough money to make your mortgage payment, make your car payment, you can pay off your credit or bill every month. Wealthy, I think, is when have a degree of independence and autonomy. The weird thing here is that wealth is the money that .

you don't spend the switch gears and talk about reading and writing.

How do you select what you read? I heard this A, I think, years ago who said you want a wide fund and a tight filter.

You are one of the best story tellers of our to teach me how to tell a story like Morgan housel.

I think it's two things. One is.

Welcome to the knowledge project to by weekly podcast expLoring the powerful ideas, practical methods and mental models others in the world's where knowledge is power. This podcast is your tool IT for mastering the best of what other people have already figured out. I'm your host.

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As remember, you'll get my personal reflections at the end of every episode, early access to episode des, no ads, including this exclusive content, hand edited transgress es and so much more. Check out the link in the show now it's for more. Today, my guest is Morgan housel, the best selling author of the psychology of money, and same as ever, morden's unique perspective on finance, human behavior and life has transformed people, including myself, and how I approach life and investing.

In this episode, we explore the powerful concept of positioning yourself to put the long game Martin n shares insights on what that means to adopt a long term month, that practical steps you can take to cultivate this perspective in your own life. Well, much of this conversation is about money, including how to make IT and how to keep IT. You'll discover that it's really a dealing lands for understanding psychology and human nature.

We talk about how recognizing that different people are playing different games in life and how this insight can help you make Better decisions. We also talk about writing. As a writer, Morgan has master the art of using stories as leverage for statistic.

He shares his approach to writing and how he crafts compelling narratives that make complex ideas accessible and memorable. We also explore the critical distinction between rich and wealthy, and how understanding this difference can transform your relationship, but not only money, but success. By listening to this episode, you gain a wealth of insight and practical strategies for navigating the chAllenges of investing personal growth and life itself. Morden's wisdom will inspire you to think different, embraced the long game, and find greater meaning and joy in your journey. It's time to listen and learn.

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Get thirty percent off your order at protect dot com slash knowledge that's P R O T E K T dot com slash knowledge or use code knowledge at the checkout for thirty percent of. I want to start with a bit of a paradox. The less money we seem to have, the more risks were willing to take. Can you explain that to me then?

Economy, uh, said something along the lines of, when all your options are bad, your willingness to take a risk explodes because you ve got nothing else to lose. And I think you see this in a lot of areas in life, one that I see IT all the time. And that is A A big new story in the united states and off at the same in canada.

But in america, we spent something like a hundred billion dollars a year on lottery tickets, hundred billion dollars massive that people spend on lottery tickets. And if you dig into who's buying IT, it's almost exclusively poor people. They buy the vast majority of lottery tickets, and the poor you are, the more lottery tickets you buy.

And these are some people from, they literally can buy food or they might not be homeless. And when whatever little money they have, they go into a seven eleven and by some scatchy tickets. And you might look at that and say, like idea, like what are you doing? You this is the domestic a have ever seen and and maybe that's the right answer, like maybe you could to stop there.

But economic framework, I think IT starts to make a little bit more sense. If you have someone in a situation like this who in their mind, at least they think I can't get a raise, I can't build a career, I can't get promoted, i'm kind of stuck in minimum wage job. If that's their minds, then buying a lottery ticket might be the only time in their life where they can say to themselves and believe, like, this is my literally ticket out of here.

This is the only chance I have to get ahead. And so IT starts to make a little bit more sense in that situation. And maybe you can trust that with someone who has a very high network, they might be like, look, I could just put on my money in treasuries and just live for the rest my life to soft the interest. And when you have so much, you don't need to take the risk.

What comes down to perspective, right? So like if I could see what you see and feel what you feel, that decision would be rational. Yeah.

there are so many things in life where you can look at other people and the decision's they make, not just in money, but for politics, their health decisions, whatever you might be, and fiercely disagree with IT. But what easy to overlook is that if I were in your shoes and had experienced what you had, had the same family dynamics that you do, made the same DNA that you do, I will do the exact same thing.

And I think that is a more important question to ask yourself. Like, what financial decisions would I make a differently if I were born in a different error, born in different parents, born in a different country? And I think you can answer that question honestly because you don't know, but you know there will be a lot of things different that are completely outside of your control.

Where and when you were born would have a massive impact. You and I should not pretend that if we were born in one thousand nine hundred and sixty in nigeria, that we would have the same views about investing in the stock market over time that you and I do today. This kind of gets to the topic of luck.

And a lot of people, when you bring up block, they will say something that sounds smart that I I fiercely disagree with. They say, like, oh, you should increase the surface of your luck. You should like, oh, the harder I work, the lucky or I get was like some variation of that and like, no, if you can do something that changes your odds of an outcome, it's not luck by definition.

Look to me, the biggest are wearing when you were born. You can control the bill gates couldn't control IT you, I must couldn't control IT. But that has a massive, massive impact on where you're going to go in life. That to me is what luck is, is what you truly have absolutely no control over.

And then there's also that the not only the country you're born into, but the social, economic household are born into the schools that you go to. How much of this is nature versus nurture versus chosen nurture?

The that that I think is so astounding is that income among brothers is more correlated than hide or weight. So basically that means if you have a brother who is rich and tall, you are more likely to also be rich than you are tall. It's more correlated than the little DNA that you, that they are sharing with each other.

Look, is that, is that a perfect correlation? Now, are there is IT possible to be raised by a poor family and become rich? Of course, is IT possible to be raised by rich family and and end up in the streets, of course.

But there's a very strong correlation between those two. I think people get really a can get kind of tasty when you talk about luck. Because if I say that you got lucky, I look jealous. And if I say that I got lucky, uh, I feel diminished in in what i'm doing in life. So IT plays a massive role, but it's very easy to ignore the impact that has in the world.

How do we break down that contribution between luck and skill or what's repeatable on our part?

Rather than saying what is luck? I think it's important to say like what is repeatable? What is something that happened that I could do again? And if we look at buffett, this guy standing behind our shoulder here, and and this look at the course of his life, I cannot, he cannot recreate the trading conditions that existed in the one thousand nine hundred fifties that allowed him to buy blue chip stocks at three times earnings.

Whatever he was back then that he was doing, he can't create that. He couldn't do IT again. But could I or you or anyone else listening try to recreate his patients with some of his risk framework? yes. So that's something we should pay attention to. You want to find what is repeatable and what you could do again and those of the things you should pay the most attention to.

And that's fascinating, right? Because when we look at buffet, what we want is the outcome. And what we don't think about is all the things that go into creating that outcome.

So what stays the same between all these different decades? Or he's done this, right. He's done IT from buying net net bend ground stocks all the way to buying great businesses all the way to the patients to do nothing. And then once every ten years, deploy whole of cash. And what is consistent across that period in your money?

Two, with the big ones, we can come up with dozens of things that are consistent with someone like buffet that the two big ones are in dance and maybe tied to that, capping a downside race that allows him to stick around for longer than anyone else. There's also a psychological trade of wanting to keep going longer than anyone else.

Um I I I use this that in in my book that ninety nine percent of buffs net worth was accumulated after his sixty th birthday like the vast majority of people, including me and maybe you if we became a billion ary age sixty, would be done and moved to florida and buy a private island and like live happily ever after. For him to be that successful and to keep going full blast for what's now another thirty three years and still going stronger than ever is a very unique characteristic that plays a massive ve role in the success. If buffet had retired at age sixty or fifty, like a Normal person would have in that situation.

You have never heard of the whole reason I is so successful is just the enduring. And there's again, there's a psychological and a financial component to that never getting wiped out financially and the psychology that will allow him to keep going full blast for nearly a century on and now. But that .

sounds academically correct, but in temperament, incredibly difficult because I see my friends getting rich of like bitcoin or something. And that makes me want to change the patients that I have. I know how to get wealthy over time.

We know historically that what's work is saving money, being very patient, letting IT compound decade after decade. Then all said, you wake up with A A ton of money and financial independence. But if I see my neighbor getting richer quicker than I am, IT makes me want to accelerate that timeline and my lack of patients sort of changes the outcome.

Not having formal is the single most important financial skill. I think it's so important that you cannot ever imagine accumulating significant wealth over your lifetime if you are acceptable to formal. I if there's a one thing like one trait that you want that's going to loe you accumulate wealth is the lack of formal, particularly in modern markets.

I can get so crazy with social media and read IT and twitter and everything if if you are subtitle to formal, there's no hope for you over time. I, I, I really don't think that's an exaggeration. And that being able to see your neighbor get much richer than you and not being being impacted by IT is is so incredibly critical and easy to overlook these days.

I don't have that many financial. I could never be a stock picker. I could never be a trader. I don't have the intellect or the the horse power to pull that off.

But I feel like i've never been at least that's acceptable to formal IT doesn't bother me in the slightest to watch other people getting rich brand, be sure, are our our mutual good friend had a quote that I love. He said, I am perfectly happy watching you get very rich doing something that I would never want to do. And I think that's that's a great way to framework.

I don't get jealous or or anxious to watch other people get richer than I am over time. My investing strategy is to own index funds for as long as I possible can, to be average for an above average period of time. And I think that will actually lead to an incredible outcome. Not only will IT achieve the financial goals that I have for my family. But I think over a long period time, IT will put you in the top desi, at least of people who are who are compounding money over time.

I really hard to appreciate that what short term optimal and what long term optimal are, are often two different things.

plein different things. How reMarks talked about this investor that he knew who in any given year, he was never in the top half versus his peers. He was never in the top fifty percent of of other investors.

And over a twenty year period, he wasn't like the top four percent because everyone else who is beating him in a given year could not keep IT going. And so like, what's your ultimate goal? So much of investing is just define the game that you're playing.

And I don't look down upon or criticize people who are short term traders, maybe that, that's their game. And for their investors or for that, I can make sense for them. My game is, is different. I think your game is different. Most people's game might be a little bit different. And what's important is that if your game is to invest for the next twenty, thirty, fifty years, that you're not taking your cues from people who are playing a different game of trading for the next quarter. And that's where a lot of danger and investment comes from.

You've changed my couple allocation strategy, our conversation, our walks totally.

how how how so what what what did you use to do that you don't anymore?

I used to do a lot more private investments and now it's mostly index minds. And as things sort of role in h through dividends or whatever, just get through invested index funds. But it's our conversations that change that great.

that makes me happy and nervous that having influence. One thing that some people will say when you talk about index funds is like, what is the guarantee that this is going to work for the next fifty years? okay.

I understand IT works in the past fifty years. In my response, always like nothing. There's no guarantee that this is gonna. It's very possible that IT doesn't work out for whatever reason.

And there have been periods you know from the know the late one thousand nine hundred twenty years in one thousand nine hundred and fifties where the returns were terrible or even from two thousand and twenty ten, you had basically zero percent real returns in index funds. So it's not perfect in the slightest. Nothing guarantees that it's gonna work or be satisfactory over time. But I think when you adjust IT for the effort that is put in, the lack of effort has put in basically zero effort to do, and you adjust IT for the fees, which round to zero. Now when you adjust for all those things, it's a very appealing way to invest over time.

If I was look at your baLance, tey, what is your capital location strategy?

Trying to think what like the percentage wise, it's probably something like fifteen to twenty percent cash, the house that I live in and in the rest of the rest index funds and shares a markel where on the board directors and that IT are those my only assets cash house index phones mark l stock .

that's which index phones.

uh one guard total stock mark index vanguard value fund and a little bit of a in international fund.

Why do index fans work?

So on two reasons. One is it's always gonna be the case that a very small number of stocks account for the majority of returns. So recently it's been uh saying plus in video if you didn't all know stocks fang plus in video over the last decade, your odds of outperforming are are very, very low. It's not zero, but it's incredibly hard if you didn't own those few. And even if you look at an index fund that owns a thousand stocks that say you're going to get the majority of returns from the fewer than twenty of them.

And it's always been like that back in the nineties, IT was uh IT was a well and cisco and microsoft and dell in those kind of companies in the previous generation, IT was general electric and and those kind of companies is always the case that is very tae driven the distribution of returns and only the index just guarantees that whatever is gonna the next driver, I know because it's extremely difficult to know what those are gonna be. If you have gone back to two thousand uh uh four twenty years ago and try to predict what are the big winners going to be over the next twenty years, well, by the way, some of those companies didn't even exist yet. Facebook didn't even exist yet.

Google is still a private company or maybe just gone public in two thousand, four. The big winners are, I think, extremely difficult to know with any foresight what it's gona be. And if you had suggested even three years ago that in video going to one of them, you like what make like I would sound and absurd.

So you're guarantee that you're going to own the odd balls that account for the majority of the returns over time. The other is, I think the the lack of effort that goes into IT that is needed. Investing is one of the very few endeavors in life where the harder you try, the worst you're probably.

And yes, there are exceptions to that room on technology. You you can name the exceptions for people who tried very hard and did very well, but for the vast majority of people, going to be a negative correlation between the effort you put into IT and the results that you got out of IT. And so the the leave at alone, an aspect of of investing of in index funds is very important.

One little stat I love about this is that if you look at both the dow and the S M. P five hundred, those are not static indexes. They change over time. There are new constituents that are added. Companies go out of business or they merge and the new and new companies are added to that.

If you were to look at the dow, I think one, one of the study showed over the last hundred years, if rather than adding a new company, when one of the original components, a went out, a business emerged. If you just left IT alone, don't add anything else, don't take anything out, just literally take the original components and leave them alone. You would have done Better then the companies that were added and removed added and removed, like any activity that goes into IT tends to be detrimental over time.

That's I I I always thought this is is very fascinating. It's literally like there's a very few exceptions in the index world to wear. The more effort you put into IT, the Better you're onna do over time.

Do you think we find IT boring? And that's why we don't want to do IT.

It's a combination of boredom and just the counter intuition of the less effort, the Better we're going to do because any other endeavor in life, whether there is your physical fitness or whatever you might be, there is a positive correlation. If you want to become in Better to shape, you exercise, you put more effort into IT. In most endeavors in life, the harder you try, the Better you're onna do.

And investing is just not one of those, and it's so not intuitive that people end up tripping over themselves. I would also say too, that I am not against active investing in the slides at all. I have so much respect and admiration for the people who do as well.

And the stats that get thrown around that are true that you know ninety percent or more of mutual funds will underperform the benchmark response to that. That is always like, of course, that's how IT is. You should not expect to live in a world in which everyone who tries to beat the market can do IT.

Of course, that's how IT is in. The people who can do IT are enormously talented, and I have so much respect for them to have more sitting behind our soldiers here and other people. I I know people, you know people who have been and I think will continue to be successful, ads。 So I am not a passive sallet in the slide. I just think for myself and many other people, is probably the smartest way to invest.

How do you keep your goal posts from moving as you accumulate and compound wealth?

I think everyone's, including my and my wife's, have not stopped moving nor nor should they. I I I don't personally aspire to live in a world where if i'm lucky enough for my network to go up a one hundred percent of its just a cruise step savings over time. That's not the life that I want to live.

I wanted have a great life with some great material possessions and travel with my kids and live and live well over time. If network growth ten percent, but your expectations twelve percent, that's when you get in. The trouble is this is the gap between the two.

And so look, i'm making this up. This is this is not an actual analysis, but I bet over time, if my network has gone up by ten percent per year, our goal post has grown by five percent per year and making those numbers up. But it's something like that.

So yes, my family lives a Better life materially today than we did ten years ago, but we've still saved in lots of money during that period. I think that all that matters over time is that no, and even a buffer t and monger who are known for being through a buff lives in the same house about when he was twenty six. Yes, we also flies a private and had a beautiful beach, front house, laguna beach.

These guys are not living like poppers over time. And that that's why I think usually important. It's just making sure that there's a gap between your network in your expectations.

Seems one of the things that we inherit from society is that the house you live in is your prime financial asset. Yeah, that seems really recent as well, maybe the last thirty, forty years where that become the vast majority of wealth for americans and canadians.

I know in the united states, real home Prices 啊， for most of modern history, in the twenty years century, were flat as a pancake rubber. Sully of ye didn't did a lot of analysis on this tracking. U.

S. Home Prices succeeded since eighteen hundreds. And in real terms, from probably the one thousand forties through the one thousand nineties were flat as a pancake on the average across united states.

And then in the last one years, starting with the housing bubble that started around two thousand, three, they exploded, tired. And of course, we had the housing crash in two thousand and eight, and people thought that was the end of the bubble. But then they may have exploded higher, even more.

And real home Prices in in the us, in the same canada are much higher today than they were at the peek of the bubble in two thousand six on average. Of course, there are many variables going into that. A lack of building of new homes.

Uh, that didn't keep up with general growth. And IT makes IT IT kind of buy for cates the world in terms of if you have if you have owned a home for any period of the last twenty years, you provide them very well. And if you are looking for your first home, today is harder than it's ever been.

Particular now that interest strates in the U. S. Are seven or seven and a half percent for thirty years, fixed ate mortgages. Combine that with home Prices that are just absurd, particularly in the in the metro areas that people want to live in.

It's completely bifricated because if you own a house for the last ten years, you can sell that house and take the equity that has grown in that house to buy a new one to use for your downpayment on the other house that's been in whose Prices has been inflated. But if you're trying to break in for the first time, like it's it's a joke. It's a complete joke.

So that's it's it's a very difficult thing. I would not I have a lot of sympathy for the first time home buyer today who who does not have parental support, which is the vast majority of harder than it's ever been. And there are a few things that make you feel like you are stable in your adult life than owning the house you live in.

And I think IT plays a huge al. And a lot of things in life, a lot of people, this would have been same for my wife. And I don't want to start having kids until they own their home.

They want to have that sense of stability before they start having kids. So I think the lack of housing affordability has an impact on demographics and having kids over time that will echo for the next fifty years, seventy years. So we plays a huge role in in what's going on society.

There's also a sort of a difference between what's optimal financially and what's optical psychologically. We've had this conversation before or you you told me you paid after more. Yes, and that makes no very little financial sense because you you have one of those crazy like really low .

margit with three point two percent fixed for thirty years and we paid IT off, which I I say very true, is the worst financial decision we ve ever made, but it's the best money decision we've ever made. And the difference between the two is, like, look on a IT is terrible.

I've done the math of like, what if I had just invested that money instead? How much what I more money would we have today? It's a lot if it's a lot of money, but nothing that we've ever done in our financial life is giving us more happiness than paying that off.

And a lot of that is unique, maybe to my personality. This is not advice for other people because maybe you and other people don't have that personality. And a worst case scenario thinker, uh, I also have a career that can be fickle.

And so and and i'm the sole bread weather in our household. My wife is, is, is, is home with our kids. So with all of those, my personality, my career were not IT made perfect sense.

And when we did IT, I was nearly in tears with joy. When we did IT knowing full well that he was a that was a mn financial decision. So I think once you stop viewing money as just trying to make the spread sheet happy, and you view IT as a tool to live a Better life, a lot of things change.

And in that situation, IT was a tool that improve the quality of my life and my family's life, I think, dramatically, even if IT was the dub thing that we've ever done on a spread cheat. And a lot of people night when he says they'll still push back and be like, will walk me through, like why I was, why is rational? It's not rational.

It's not rational at all. I I can't explain to you on a spragge IT was that I was done to do but IT may be really happy and like is only worth, is only value to that, you know, for you like I made me happy. We can just stop right there. I don't need to prove IT anymore.

But doesn't that make IT if you you're playing a different game, right? Like if you're trying to optimize every penny over the long term, maybe that doesn't make sense. yeah. But if you're optimizing for happiness and long gevalia IT doesn't make yes.

And so I think the the the quality of factors of money are hard for people to wrap their head around, particularly in a field that has been taught as an analytical field. When you waif, you get a degree in finance or get your C F A whatever or be it's purely numbers. That's that's not totally act. There's some the some in there, but vast majority of how they teach finances just numbers. And so I can be hard for a lot of people to rap their head around why you would do something, where the numbers do something.

What can money do for us? What can I do for us? What's the lie that tells us? What's the thing that we we feel like I can do for us, that I can?

I think the the lie is that a lot people in life, if they're unsatisfied with how their life is going, is a very quick and easy answer to say if I had more money, things would be Better. And that can be true IT can solve a lot of your problems. But I think what a lot of people want in life, not everyone.

I don't want to completely generalize this, but what I want that I think is is reasonable, uh, common for people is I want independence and I want to spend time with the people who I love, my family and friends, and that's pretty IT. And can you use money to do that? Of course, money is is kind of the oxygen of independence. And if you can use your money to spend more time with your friends and family, you and I want add to a lovely dinner last night with each other that cost money. Thank you for buying, by the way, and we had a great time with each other.

Now, if you, I went for a walk, that would have been for you would have been great to, but using money for to spend time with whom you want, when you want, for as long as you want, waking up every morning and saying, I can do whatever I want today, even if what I want to do is go to work and and be productive, is absolutely critical. And that is different from the need drink of just off. I have more money.

I can buy more things. Nice of things. But what you actually want in your soul is to like is you want independence and to spend time with people who who who you love money can do those things.

But it's not as directives people, these people think one, one example of this is like, well, having a nicer house make you happier IT might. But the reason is going to make you happier because that makes IT easier to have friends over IT makes IT more convenient to hang out with your kids in a big, nice, glorious living room. So it's not that the house will make you happier, but the house can make IT more conducive to do things in your life, that those things will make you happier.

Who is reading rich, that poor, that with my Youngest and we come to the the concept of a house and if I get this right, that was a your house is liability and not an asset. So don't think of IT is like a financial asset that's gna grow on a quire wealth for you. Think of IT.

Is liability this just a sort of table stakes for playing playing the game if you want, or living life and having stability in all these other things? And I thought IT was really interesting as we talked to about IT. I was like, you know, it's just the house what the house is effectively, it's a and what matters is what happens inside the container, the host internet itself. Like the who .

career yeah uh, just recently, just last month, uh, I traveled with my son to the how that I grew up in, and I stopped by the house that I grew up in for the majority of my childhood. I hadn't been there in twenty years. We pull in the driveway, of course, who live there now, and we just set the car.

But I, I SAT there for ten minutes. Just kind of reminisces about as soon you put the driver of all these memories start flooding back of the things that happened in that house, good and bad, fun and sad, like like so many memories in there from my childhood. And of course, you can go on zillow and see what that house is worth.

They'll give you a very specific dollar figure for what the house is worth. But what the house is worth to me and my parents and my siblings is complete is invaluable as you can put a Price tag on those kind of memories. And I think that's common for most people.

There is a tangible financial value and there's this intangible that you can ever put a Price on that you for it's true for a lot of things in life that there is a financial value. If if if I asked you and said, what is this house worth again you gone zl and say, but what are the memories built inside that house worth? It's you put a Price on .

that when you reach financial independence. Is is that the ultimate when you're spending money, but it's not a matter of the money are not quana dollar figure?

Start using IT as a tool to become happier. Now what's going to make people happy is very different. Having an incredible for ori collection might make you happy.

Uh, so if it's not to say that the things will make you happy or not material that you should just use us for experiences that I think is a step too far. I think a lot of people have hobby that cost a lot of money, that are material that really make them happy. So it's like, great.

There are like people out there who would say, you know, who would really promote frugality, ity and be like you. You don't need a big house. You don't need a nice house.

Big house is a nice car, makes some people really happy. Other people, they don't. It's whatever you can use money as a tool for to give to live a Better life VS. I think a yard stick of status and success to compare yourself against other people. That's what gets dangerous is when you're just using IT as a score card to compete with other people.

how do we catch yourself in a status m or we're playing a status? Can, but we don't we can see IT because we are in IT.

It's unavoidable at the economy level, especially the broad macro level. IT makes sense from an evolutionary perspective that people compete with each other. There's limited resources.

And like, if I want, if I want the food, if I want to make whatever A, B, I need to compete with you, that's always what is is. So it's so natural, it's never gonna away. This is truly like, same as ever. People are always going to be keeping up the joes.

And you can imagine a world in which our kids and our grandkids are living way Better lives than you and I are living longer and have Better material uh, access to and are no happier for IT because they're just competing with other people who have even more than that. It's always been like that. Give people a hundred years ago could see how you and I are living today.

They're be completely dumbfounded with virtually everything we have in our life. But I would also wager that you and I are not that much happier than they are. There maybe some aspects of life or healthier, we don't have to wake up, you know, worry that were going to die, die from the flu next week of.

But um people just adjust their expectations to whoever is around them. A lot of this is like A A A D N A thing. Some people are just way more acceptable to wanting to keep up with others and other people who can just care less what other people think about them.

There's probably a six people in my life who I really desperately want their love and respect, my parents, my wife, my kids, a handful of friends and everyone else. It's not that I could care less. But after those six or eighty eight people, IT dropped dramatically. And the vast majority people on twitter and what not, I could I could care less what you think about the decisions that are making.

So I think if you define that, you know whose whose love and admiration do I want in life, defining who those people are, and what do I have to do to earn their love and respect, the love, respect of my wife and my kids in and my parents, and that's what I want to use money to do in my life. So like you spending time with my family, taking them to cool places and what not, there is a financial aspect to this. But once you define that personal game you're playing, a lot of these decisions clear up.

I think a lot of people don't actually think about working in their point. They look at other people, and, you know, from my lands, you should be doing something different. But that really comes because we're optimizing for different things. Yes.

I bet if you and I SAT down and like, deeply compared our lives, there would be things that we do very differently spending, like you spend a lot of money on this, and I don't. I spend a lot of money on this and you don't. And it's not a disagreement.

IT is what different people, even if you are about uni e, about the same age, same education, know that there's very a lot that is just like but we're we're different. So I think most financial debates, whether it's like an investing debate or saving or spending debate, people are not actually disagree with each other. They're not actually debate is people with different personalities talking over each other and what you come to terms with that. But there's not one right answer for any of this.

There's so many things that we inherit from our parents, like invisible rules about money or practices around money. I remember like these moments in my childhood where, you know, my parents had to decide between fixing the roof and fixing the car, and they could not afford to do both. And I remember that, you know, they worked for the military, and the military send them a financial adviser.

And I remember listening to the conversation they have with the financial adviser and how out of the loop they were with what was happening with my, you know, that the severance pay that my mom was getting and what was happening. And I had new knowledge of bit that was like, I never want to be in this position yeah. What are the lessons that you learn from your parents that really stick with you today, that sort of define how you think about money?

The two things that stick out for my parents, my, my parents are bringing. So my dad started undergraduate college when he was thirty, and head three kids on the Youngest of three. He started his undergrad when I was like a muscled something like that.

And he became a doctor when I was in third. My early child and my parents were very, very poor. There were students, and maybe they had some like student grants that already loudest dubai groceries and live in a tiny little apartment.

We are very happy at a great childhood. But they were very, very poor. And the my dad became a doctor, thousand and third grade, and had so that IT was immediate shift towards very poor to like upper middle ass, literally overnight when I was in third grade.

And my sibling and my brother and sister were teenagers at that point. So I got to see there, like both sides of the spectrum. And I remember the year 19 ninety three is the year everything changed in our family。

What sticks out from that is that the frugality that was demanded of my parents, when when they were poor, stuck with them after they have started making more money. And so even after my dad became a doctor, they were, we were very frugal. We lived a much Better life than we did in report because we we were living in object poverty for most of my childhood.

And but, but after that I was, they had a very high savings rate. We were not spending money like my dad's. A coworkers were like, you would expect.

A Normal doctor, too, was nothing close to that. I think I looked down upon my parents for that. I was like, we could be living in a nicer house. I know how much money you make. We could be living in a Better house and driving a Better car.

But we don't, because your cheap gates, that was my view for my teens and early one is my dad was an E R doctor, which is a very stressful field. Literally people dying in front of you, in your arms every day and working night shifts and know it's a very stressful field. So after about twenty years or so, he had just had enough.

And well before I think he intended to retire you more or less wow one day and said i'm done IT was a little more plan than that, but I was that was that was close to IT. And because he had saved so much, he could do that. He had the independence to wake up one day and say, i'm gna do like, I am proud of what I did, but i'm going to go do something else now.

And a lot of his peers could not do that because they spent like doctors. They lived in big houses and senter kids private school and draw fancy cars. So when they wanted to quit, they couldn't.

They wanted to retire. They were, they were tired and they wanted to quit. But they couldn't do IT. And that was such a profound shift in my thinking.

This was not a long ago and a twelve years ago or so of when I was like, oh, that's that's why you are saving so much IT wasn't because you are cheap skate is because you are wanted to become independent. And now you are you, anna, quit so you could quit. That's why you are saving.

That was a profound shift for me of, like, you're not saving because you're just scared to spend. You're saving because you want something different, which is independence. And independence is gonna give you so much more pleasure than the big house ever would. That really stuck with me?

I hadn't they talk to you when you said, hey, you're just being cheap skate like, let's do this thing or let's get this bigger house .

or if they heard what I just said, they would say yes. In hindsight, that's all true, but we didn't know we were saving for independence. They also, my my parents are very interesting that they have dollar cost averaged in the vanguard index funds for more than forty years and never anything ever.

So they would be like literally in the top probably two percent of investors during that period without any financial education, no financial skill, no, nothing like that. So I think a lot of the decisions made worked out, but IT hasn't really been conscious. So think back when I said your chief kiss, I am sure they just kind of shrug.

And okay, well, what we're doing, but I don't think they actually had a plan for what they were doing. IT was just again the frugality that was demanded of them. My parents also met on hippy community in the one thousand nine hundred and seventies, uh, not exactly the breeding ground for like good saving skills.

And so for their entire adult lives, for literally decades, they were, they had zero money, they had absolutely nothing. So they learned how to be poor. And they're also very happy and have a great marriage. If you can learn how to be poor with dignity, that skill will just like stick with you forever. So when they started making money, I think, I think it's probably true that they didn't exactly know what to do with that because they were so used to be there are so used to be poor but um whether he is conscious or not, IT created the thing that has given them so much happiness and pleasure, which is independence.

What's the difference being rich and being althias?

The definitions are are my own. I'm just making this up, but I think riches, when you have enough money to make your mortgage payment, make your card payment, you can pay off your credit bill every month, like you can afford the things that you're buying. Technically wealthy, I think, is when you have a degree of independence and autonomy.

The weird thing here is that wealth is the money that you don't spend. That's what wealth is like the homes you didn't buy and the car you didn't buy. It's money that you saved and invested that is gone to give you independence.

And that's a hard thing for people living to rap their head around. That wealth is what you don't see because I can see your house, I can see your car, I can see your clothes, but I have no idea you're not worth S. I can see your your broker account, can see your bank account.

So wealth is always hidden. And IT throws a lot of people for a loop. Because if if I was looking for a role model of physical fitness, I will I can see your fitness, I can see your weight and your muscle tone, that is, is all visible.

But when you're looking for a financial role model, who do you look up to? And a lot of people, particular Young people, will look up to the guy in the machine with the ferry. But that guy, for all you know, is living paycheck to paycheck.

A lot of, a lot of these people are. And the person who is actually wealthy and independent might be the person in the modest house drive the modest car that you would actually want to be. If you want to be wealthy instead of just rich, you want to be independent instead of just making your monthly payments. The people that you actually want to look up to, or some of the hardest people to identify.

and society who do you look .

up to in general, who I look up to, our people who do whatever they want in people independence. And there's a huge range of that. I think there are people whose net worth is, you know, in the last six figures who are independent.

This is my name. mr. Money must ask you to started the fire movement ten or fifteen years ago. And history was when his nett orth was six hundred thousand dollars, not not that much money. He retired and live a great life on IT.

And there's other people, you know, obviously jeff basis and elon musk are independent, but I would I would venture that more than half of elon must dayers is doing things and he doesn't want to do. It's like they know are piling on all these things that know is he's still driven to do them and get them done course. Of course he could quit tomorrow, uh, but doing things that he doesn't necessarily want to do. So anyone who can wake up every day and say, like I can do whatever I want today if you have independence, that that's my personal goal. So the people who have that any income level are the ones I look.

Why are so many people who have money? I think the answer start may be Better than the last one. But why are so many people who actually have a lot of objective wealth or money, if you will, unhappy?

Andrew wickson, our friend, had a saying where he says, like a lot of people, i'm paraphrasing him, but a lot of people who are very successful are just walking anxiety disorders, harness for productivity. And I think patri, who said the single world that he would use to describe a lot of very successful people is not driven, is not passionate, tortured. They wake up every morning tortured about, like, i'm trying to solve this problem, I have to get ahead, I have to hit this goal.

And they are literally, they they wake up very anxious and depressed and like you know just tortured about about achieving their things on last couple months ago, given interview where he said you might think you want to be me as in like the richest person in the world, richest person in history, but you don't IT was like I I think he said something like it's a it's a tornado up here. It's a mess inside of this head. You do not want to be inside of this head.

I think that's really true. I think that's a profound truth that you might think you want that kind of life. But there is a cost to that life.

And the reason he is successful is because he's pry, woken up, tortured for his entire dot life, trying to say these problems. I am so glad and grateful that people like himself exist because they made the world a Better place, new technologies that we can all benefit from. But there's a big difference between saying, i'm glad you exist and I would want your life. Those are two very different things.

And sometimes, like we're looking at the outcome where, like, I want the outcome. I don't want, I don't want all the stuff. We do this with athletes too, right?

Like I want to go metal. I don't want to five and practices seven days a week. I don't want to.

I think IT is an eval. Who said you can't just pick and shoes bits of someone's life and say, I want his physical and her network and I want his house and you have to pick the whole package and a lot of the great things in anyone's life there. There's a cost that came with that, whether it's their career success that they had to put into IT their stories that bill gates worked.

I think IT was twenty five years without ever taking a single day off. And most the days he's working, he would be like, he came home at midnight and crashed on the couch for four hours and we back to work. I'm so grateful that he exists, but I would not want that for myself. That's not my definition of the life that I would want. Our friend David centra, who runs the podcast founders, has profiled, I think, now by three hundred and fifty founders over time. And he says, I don't want to put two, don't want put words in mouth and precision he said, the only founder that he has ever read their biography and thought, I want his life is adsorb and and everybody else that he reads that I think he comes in to the same conclusion that I do i'm glad they exist. I would never want to live their life because there's always a hidden costs that when you dig into IT you like, yes, he was very successful because he sacrificed a million things that would be very um that are very important to you and I well.

let's talk about that a little bit like you you're you're incredibly successful. Your books have sold well over five million copies. Now the inbound to you for request of your time, your speaking, your presents, hope on the phone fifteen minutes must be off the charts. How do you keep your surface is small or keep doing the things that you wanna do?

what? The only way to manage that is to say no to virtually everyone. And that sucks for me for two reasons. A, I don't have any assistant. I'm personally saying no to them.

I don't want to loft anyone else and I don't like, I don't like making, making people that when when you blow someone off or even respectfully say no, there are going to be hurt a little bit. I vividly remember i'm not going to say who but names the u. And people would know that I reached out to early in my career and said, hey, I would take, can I please pick your brain for fifteen minutes and they said, no.

And I was heard. I still remember that. I still remember the emails. I remember reaching out to a couple of authors by fifteen years ago and saying, my name, Morgan, i'm a aspiring author and trying to and trying to do this. I so admire you.

Can I please ask you, you know, just ten minutes on the phone, 要 顺丰 respond。 And I still remember that. So if if anyone who remembers that gets in the same position in themselves, what they have to say no to a people, it's sucks. But there's no other way to handle that.

no way to manage IT seems like. And we've talked about this before. But success to the seeds of its own destruction, how do you think about that?

What ways does IT do in the biggest is just that IT allows you to become a lazy, and it's going to degrade the thing that made you grape, what made you, what made you like, literally you successful is probably like some degree of like waking up and feeling uh feeling feeling inadequate, waking up being like I I know i'm capable of doing more than i've achieved already and I got to go to do and it's it's pretty common like whether that was driven by um a lack of a self, a steam like whatever that was you waking up like I need to hieu more than I have today and what you have achieved some level it's easy to be like.

Well, I i've already done that and the the thing that made you successful that drive you had is minished uses some companies and in people. And the other thing that's really powerful is when you are low, lower on the total ball, it's very it's easier for everyone around you to tell you what you're doing wrong and the higher are you gain, particularly when you get up to the very high levels. No one wants to tell you doing wrong because you're probably paying those people to be surrounded, uh you know to to surround you with advice and they don't want to tell the emperor he has no close.

That happens to a lot, lots of people, lots of companies or not. The thing that made you great is degraded the more successful that you become. And some people fight this very well, but a lot of people don't.

That is a tough thing. I think the laziness aspect of IT of once you become more financially independent, you're not driven for most of my career I was writing because that was how I had my children. I have, I have to do this.

Yes, I love IT. Yes, I enjoy IT, but I absolutely have to do this once you get to a point where it's like like I still love to do this, I don't have to do IT anymore. Um is my motivation lower than I used to? I think the answers yes, I, I, I, I, I don't like to admit that, but I think the answer is yes.

Now i'm still as motivated. I am so very motivated. The key brakes, I love doing IT and I think I there's a part of IT that I enjoy more now that i'm not doing IT to feed my children.

I'm doing IT because I just love, because I love the, the, the art of writing rather than just the business of writing. But people's motivations changer for time. Now part of that is is great. I don't want to be six years old and having to work to defeat myself this week, but you shall pretend that it's not impact the thing that made you great.

I want to come to writing later on. Um I get a lot of questions about your process around that before we get there. What is risk?

You can have a million different definitions of risk. I think IT broadly, it's anything that's gona prevent you from achieving the goals that you want. It's A A very basic answer. But I think that's what IT is. And the reason that's important is because take volatility in the stock market.

Is that risk when they could be if you're a day trade or then, yes, the marker goes down tomorrow, that's a risk for you if you're if you're going to retire in fifty years, it's not whatsoever. So just defining IT in personal terms is I think the most important. But a lot of finance is not that they define risk as volatility, whatever IT might be, recessions, all these different things.

But it's a very personal answer. What is risky for me might not be for you, and vice versa. And this is what he gets back to.

Most financial debates are people with different time horizons talking over each other. This is cool, I love. That is, personal finances is more personal than IT is finance.

Fans were really important for everyone. You and I should not pretend that risk for rena's ance technologies is going to be the same for you and I within our personal households, completely different. So anything that pulls you away from whatever goals you personally have is what what I would define as risk.

If you had to break down the skilled differences between accumulating money, keeping money and spending money, how would you do that?

I often to find is getting rich and staying rich are completely different skills, and there's not that many people who are equally skilled in getting rich for sustained rich. There's, you know, a sliver society is very good at getting rich that has no ability to stay rich. And there are some people who are very good at holding on to money, but much less talented at at building IT and growing at over time.

When you have both skills combined IT, it's a very special thing. Buffer is obviously that bill gates is that there's a handful of people who are extremely good at getting rich and have stayed rich, very helped. The example that I always uses, bill gates, when he started microsoft, took the most audacious entrepreneurial swing that maybe anyone's ever taken of saying, every desk in the world needs a computer on this and he saying, in one thousand nine hundred and seventy four, whatever I was, crazy amount of risk, crazy bold vision.

At the same time, he said that he always wanted microsoft to have enough cash in the bank to make payroll for one year with no revenue, which is the most conservative, pessimistic weight N A business. So he's like, very risk king and very conservative, paranoid at the same time, very good at getting rich, very good at staying rich at the same time. It's very unique to have both those acting at the same time.

And I think at at the individual level, you can have IT to my my network, you'd say is like is very barbet like a lot of cash. That's the paranoid conservative side and stocks that I hoped to own hold for fifty years. That's like incredibly audi ous that this is actually going to work out of the next half century. And I I don't think that that's any contradiction, but it's just trying to get both of the skills of getting rich and staying rich work at the same time.

Speaking of staying rich, one of the stories we talked about last night was the vender belt and how they basically blew four hundred billion dollar fortune. What happened?

If you look at all of the robber baron, very wealthy families, the carnegies, jp Morgans, that forwards the rock of as the venerables, I think virtually all of them did well or did a decent job at managing that dynastic money, except the vendt, the venables completely and utterly watched IT um the state is you know when corneas vender bill died his network a justifier inflation um because he died in eighteen hundreds was the equivalent of four hundred billion dollars and in three generations there was nothing left which is an astounding thing to think about and in between there are three generations who just blue money in the domus ways you can imagine and the rate the reason you can say he was done is because I don't think any of them more happy.

I think they were pretty much all miserable if you dig in into the biography of these three generations. A lot of the other robber bear and families taught their children, taught their ears to run the business or to become good philanthropist, whatever IT was, the venture belts effectively told their ears your job, your soul. Purpose on this, on this planet, is to spend more money than anyone else.

And, and, and so they did IT. They built the biggest houses that were so big, they didn't even want to live in them because they were too big. They, through parties that were so extract, they were just burdens on themselves to say they were used like their so financial metric is, can you spend more money than the other social? And they're all miserable for IT.

And the the story that a lot people know now is that the first vender's air to not get any money when all the money was exhausted, the first air, whether nothing left with Anderson Cooper of CNN, his mother was uh, woman named Gloria venerable was got kind of the last trust fund in the family and Cooper is not only the most successful vanderpool air in like a hundred and eighty years, he's probably the happiest. And he's talked about this. That money that you are given, that you want to hear IT can be a burden to your ambition, a burden to your identity of building a name for yourself. And he was kind of the first venable air who is like a relieved of the burden of having to ry on this thing of, like i'm a social i'm evitable is just say I build my own name and my own career, i'm sure because his mother is gory a vb, there were doors open to him, uh, that would not be open to anyone else. But he pretty much had to build IT for himself for the first time in hundred .

and fifty years. Do you believe that money should be able to pass between parents and kids or able.

sure is your decision. But there are obviously downsides. And i'm sure I hope it's a long time for now that all leave my kids some money. Not a lot. I love the buffer quote where he says, leave your kids enough money that they can do anything, but not so much money that they can do nothing. And that, I think, is really important.

I want to use whatever money you've saved to give my kids the best opportunity of building the life that they, that they want, but not so much money that they are forced to live the life that I want for them. Admit some families who are are very wealthy, and wealth becomes like a personality burden of because I inherited this much money. My job is to just be an air of my grandfather, an air of my of of of my parents, rather than finding out who I am and discovering who I am for myself.

That's just like the very high levels. But you you don't want the wealth that you pass your kids to burn them into a lifestyle that they don't want for themselves. You just want to be like, here's enough money, is that you can have the leverage in the tools to find out who you want to be and live the life that you want. But not so much that is gna burn you into like forcing you into a direction that you don't want to be.

So much like there's a geometric progression of the Price here, where the more houses you require, the more stuff you need, the more stuff you need, the more managers you have, the more managers, you know, as you, I was talking to sams, all we are supose able to procs. That never happened because he, he unfortunately passed away. But when I was talking to me, he he just wanted two houses, right? He didn't want ten houses.

He didn't want all of these things like I can just want them, I don't want to have, I want to that comes with that. Do do you think that we lose side of that and then there's sort of like a natural entreprise wealth, right? Look, IT starts to expand. Yeah and you actually have to apply a lot of energy to keep IT small .

yeah it's obviously not the case that the more money you have, the less happy you're gonna. That's obviously wrong. But I think if you have more money, you can have a more complicated life and complication can lead to a lot of unhappiness.

That's definitely true. And I think this is mostly true for people who are like middle wealth. If you are like extreme upper wealth, you're going to hire out every decision.

People can take care for you. It's people who have enough money to buy a second home, but they have to manage IT themselves. That's what things get like complicated in your life.

Many years ago, I did this consulting session with a group of N B. A rockies. They were, there were some of nineteen, nineteen, twenty years old, and their now making millions.

And a lot of grew up in like inner city poverty. They grew up very, very poor. And when they are teenagers, they sign contracts for millions dollars.

It's like such a start, uh, movement for them. And the purpose of this conversation was to talk about money to try to prevent the very well known path of athletes going bankrupt. A, A, A very significant percentage of these people who make millions of dollars are bankrupt t by the time thirty.

So like, how do we prevent that? And one of these athletes who was, I think he was nineteen, said something that I thought was so profound and wise. He said, when you grow up in inner city poverty and then you make millions of dollars when you're still Young, that's not just your money.

That is mom's money, that is brother's money, that is cousins money, that is neighbor's money. You can just tell everyone back at home. Good luck to you.

I got my money. I'm going to go live in the mansion. You stay in this level, but you can do that.

And he said, the reason so many athletes go bankrupt is not because they bought themselves imation. It's because they bought their fifth cousin a house. And they felt so much pressure to do IT that they had this like social burden that came with the money. And I think at many different levels, that's an extreme example. But at a lot of levels, there is social debt that comes with money.

So if you at every level of network, like if your network grows by one dollar, with that comes a couple pennies, maybe of like social death, where you are like incentivize or like push towards to increase your lifestyle, to take care of other people in ways that might be great, but might be a burden, might be a debt that comes with IT. And at some point, I think that social debt t explodes mean people who are worth, you know, fifty, one hundred billion dollars, but there's not that many of them but their social debt. Use that money wisely, to donate that money, money wisely is off the charts.

It's enormous. The pressure that they have to use that money well do not end up like the venture business to know how much pressure does, uh, jeff bases and bill gates have to donate their money effectively. And no matter what they do, no matter what causes they give to, people are going to say, well, that's not a this was more worthy than that enormous amount of like invisible social debt that comes with that .

talked me more about, I love that concept and I don't want to talk about the extremes where IT like bizos not mosconi. But the social debt like almost like you go to a wedding and you have to give more because you have more.

Is that where you got to if your friends know the of money you got to dinner, you you're force to pay. Kind of thing or like, oh, I heard I heard this guy just got a huge bonus last year. Let's see what he gets me for Christmas kind of thing that there there's a lot of that, that comes with IT.

And of course, it's a good problem to have its you you should not have sympathy for people who made so much money that they have social dead like bo who. But it's a real thing and a lot of IT is just the um intent of on yourself or within your own family to be like, oh, we have more money now. We should I guess we should buy more stuff.

It's like this pressure to do something that you may or may not actually want one one other. Like like weird, odd ball story that I thought about here on the amtrack train from washington, D C. Boston where he goes um there is always a quiet car.

It's it's one section of the train where you're supposed to be completely quiet if you want to get some work done or what not and always what happens, you go there for peace and serenity. But everyone on the quiet car is so anxious and upset, because on the clack car, if someone's so much as whispers, or if your phone accidentally goes off, people lose their minds because they have this expectation that is going be completely quiet. And so the slightest little sound sets them off and like the ironies, you go there for serenity, but you are just so angry why you're there because of anyone is making any noise to drive you crazy.

And it's the thing of just like if your expectation shift, then the little lest thing can can make you upset. Like when you go to the quiet car, yes, IT is quiet. But you also have this like sound and debt that comes with that.

You say this invisible sound. Det, that is a liability. Now I think it's so true with money as well that the more money you gain, the more pressure you have to live a Better life.

That mayor may not actually make you happier. Will smith, the actor, said that when he was poor and depressed, he could tell himself, if only I had more money, all my problems would go away. And then when he became rich and he was still depressed, he could say that anymore.

He was still depressed, but he was like, I can't say that if I had more money, I would be happier, because I really had more money that I could ever spend. So he said, what happened when he became riches? I just removed the hope that he had when he was poor.

He had this hope like I got to make more money and then i'll be OK. His riches is like lost all the hope. He is still depressed, like it's it's very inspiring to think if I have more money, my problems will go away. But then once you have that money and you realize that you stop just many problems may be even more problems you had before. I could be a tough thing for people to rap her around.

We are starting with out a little bit last night in the sense of people who who have money can really talk about money either because they have all the same problems that everybody else has, but they don't feel like they can openly can ask about IT yeah because it's like boohoo and and and .

it's true is like they are boohoo problems. There are much bigger problems in the world, if you are, you know, have afford health insurance, your homes, whatever. Much, much bigger problems.

But first world problems are real problems in people's heads. And you're write that their biology can talk about them. Very interesting. When you get together a group of wealthy people into a room where they can all start in that safety zone, they can talk about the problems, and they all have the same problems.

How do I not spoil my kids? How do I do this things that they can talk about with anyone else in their life? Because it's because those those problems are so different from the the other, like very real material health, living problems.

But there are lots of things that are very difficult to figure out when you have a lot of money or even just a modest amount of money that you can talk about even with some of your closest friends. Yeah, I am sure you do have friends who have less money than you and I do. Yes, and you can talk about with those friends.

You can talk about anything else in life, problems with your marriage, problems with your health, whatever might be. There's all these other things they are like. I can talk about the things that actually give me anxiety, right?

IT seems like the meta skill to think about right now through this conversation is how do we learn to manage our expectations?

This is maybe this is how we started the podcast. I don't want my expectations to never move. I want them to just grow a little bit slower than my wealth over time.

I want IT so that in fifty years, I hope that i'm living a Better material life took to some degree. I just want that level to not exceed my network over time. Once your aspirations exceed, you're the growth of your wealth. That's when people can. They take too much risk, they to do whatever I might be.

You've hung around and spent time with a lot of wealthy families. Are they giving talks? Or individually, the problems are the same. How do they deal with not raising spoil children? How do they what have you learned from that to say.

most of them, how do they deal with not raising spoiled children is, uh, they they don't do what that well, it's a very hard thing to do. I had a conversation recently with a guy who was, his father is a billionaire, and they theyve live like billionaire is a time. He, he's roughly orage, and he's a very down to earth, grounded, polite guy.

And so I ask them, like, how did you grow up with in private jets? And managers are not not become a spoil little prick because he's such a nice guy. And he said, despite having that much money and living like a billionaire, his parents never taught him, never told him that because we have more money were Better than anyone else.

They told him quite the opposite, like and he said something that that was was really, uh, important. He said, the reason that so many kids grow up to spoiled is because the parents are obsessed with money. That's why the parents are Richard, because they're obsess with money.

But IT naturally grows into this thing of, like, you are Better than other people if you have more money and people have less money than us, they were not they're not equal to us. And it's so basic and most cliche. But if you are very wealthy, but you're still teaching your kids good values, that will stick with them.

And the opposite is true to if you raise your kids, even if you have a lower income, but you raise them with an obsession with money, like that's the score card of measuring other people is like like what's your network? What's your salary? That's what I need to measure. You buy and rank you buy. That's when you get spoiled, the little jerk of children.

how do you ingrat tion and talk to your kids about money?

Markets are four g and eight, so not not that much yet. The other thing that i've noticed some sure is the same for you and other people who have multiple children is that my kids could not be more different, their personalities. And of course there is by the same parents they shared.

They shared have their DNA. Like there is the same house, the same rules, the same upbringing, and there are ugly, different people. So you can create one philosophy, one parenting, philos for that.

The other thing is, even if I know my children today, I don't know who they are gonna be when their adults. Does my daughter want to be a partner at golden sex? Do you want to work for Green piece?

Do you want to be a kindergarten? No idea what they are going to do. The different, no rules are gonna different for them. I also think that what's true is that the more you try to tell your kids this is what you should do, the more they are gonna rebel against that particular in their teenagers, but the more that you can just lead by example, like a, they are going to pick up on IT. You don't need to sit your kids down and say, let me teach you about money.

And in fact, if you do that, most kids are going to Young and and and and say, i'm not interested in this, but they are definitely paying attention to. Every time you say we can afford this there, they're making a mental note of IT. Every time you say that too expensive, every time you say I value this, I don't value that there.

They're forming a model in their head um that's gona stick with them forever. And so I think just leading by example with them is what we try to do, rather than trying to say this is what I want to teach you. These are the values I want to still back to my own parents. I don't think they ever SAT mear my my siblings down and said, let me teach you about money. But I I learned profound money lessons for them by just observing when I was eight result.

or let's invert IT, uh, what we can go from parenting and then maybe the money broader. But like, what lesson don't you want your kids to learn about money? What would be the worst thing that they can take away from you about money?

Don't think that all poverty is due to laziness, and don't think that all wealth is do to hard work. If you are just ranking people by their network and ranking their value by their network, that that just by the most dangerous thing you can do with money, the most profoundly wrong, take away for money. And yes, a lot of wealthy people earn IT, of course, and a lot of wealth people, or a lot of poor people make some very bad decisions.

But once you just use that as a yardstick to measure people's value by you're making, you're making a huge mistake. There are a lot of wealthy people who I cannot stand, and some of my best friends don't make that much money. And I think you you can only have that in your life. If you divorce someone's salary and network from their their personal worth in life, what else keep going?

I think what what's interesting and love.

this is a lesson. What is interesting is that if you want, if you ask most parents what you want for your kids, almost every parents say, I just want them to be happy. I just want to raise happy kids. And then if you said, do you want your kids be rich and successful? Like, well, sure, but I just want them to be happy.

I just I just want them to be happy so that figuring out how to use money as a tool to make you happier rather than just a tool to py along to become wealthier is is really important that I would know you know, there are for sure, people who earned thirty grand per year that are so much happier than people who earned three million dollars per year. And understanding that value of money, I think, is, is, is really important. Like what what can money do to make you happier? Because there's no other purpose. There's nothing else that you should even think about other than that.

what do you think is the biggest risk to capitalism?

I think it's always gonna be the case. IT is inevitable and IT is actually ideal that there are some level of in inequality in in the world. It's it's it's not only inevitable, it's idea. The opposite that is, is a but it's also the the case that you do not want a third of society waking up every morning and saying, this doesn't work for me. This system doesn't work for me.

So once you get to some critical level, I am maybe it's not thirty percent whatever IT is, but if enough people wake up in the morning and say this sucks, this system doesn't work, then it's gonna reverse itself. And there's a very long history of that. So the baLance of you want inequality, you because people skills are equal, you want you, you want that to be the case.

But there are some barrier at which IT starts to reverse itself and the IT becomes a pitch forks, pitch forks in the streets kind of scenario, uh, that that reverse now in the history of the united states that happen several times the one thousand nine hundred years and the great depression. And thinking what we've dealt within the last couple years, there's always a pendulum between labor and capital, workers and and investors, and a kind of swings back and forth of who's sticking the lion share of the spoils in this this economy. In one thousand nine hundred twenty years, IT was capital.

From the nineteen probably fifties to seventies, IT was labor. Uh and and since then it's been capital and it's kind of just back and forth. And just in the last three or four years, there has been a huge growth.

The segment of society whose incomes have grown the most tends to be the lower incomes. We're still kind of attached to this narrative of the rich get richer and the poor get poor in last couple years that has kind of flipped around at least degree that we haven't seen in a very long time. Is that the pendulum m shifting towards another, you know, thirty year trend? Maybe I have no idea, but the pendulum is always there to kind of keep itself in check.

And I think if IT gets too extreme, you can get very extreme outcomes. We don't remember this now, but in the thousand nine and thirties, during the great depression, the words dictator and authoritarian and even fascism were not the dirty words that they are today. A lot of people during that era IT was very IT was not uncommon for people to say, and even having A A big democracy just does work.

The great depression in their minds prove that IT didn't work. And people's push to say, hey, look at all these countries in europe that are going towards fashion, maybe we should try to act because this didn't work. I think that's the danger when you get to and equal in society, is that too many other people can be tempted to saying that didn't work. Let's try something even more extreme.

It's almost like I feel like I don't have opportunity and and I feel like I don't have opportunity. And it's almost like we want equal opportunity and we're okay with unequal outcome. Yeah.

it's it's a really tough thing. And I would not mean I think you and I if we felt that we were trapped, there's no way, no matter how hard we work, if we felt, whether it's true or not, that we were trapped in a low income job, you and I would be prone to some extreme views to. So there is a say, I love that from A A russian poet who spent a lot of time in the gulag, and he says, man becomes a beast in two weeks. If you have two weeks of deprivation, two weeks without help, without food, two weeks of salt, I confinement, a refined, kind, polite person becomes an animal. So if, if, if you put someone in an extreme scenario, they are going to be prone to extreme views, extreme outcomes.

Do you think most adults understand compounding?

I think it's not intuitive to virtually anyone. Michael, bad neck, good friend of mine has A A saying that so simple, but I think some is up the best. He said, if I asked you what is eight plus eight plus eight plus eight, you can figure out your head five seconds.

If I said, what does eight times? Eight times eight times, eight times eight, even if you you're math genius, really like I don't know it's such a huge number like I I I know you what IT is basic linux math is very into IT, very easy. Compounding math is just so it's so iit for even people who understand and it's everywhere, compounding is not just in your bank account, your broker account.

There's compounding in nature is compounding for social trends. And it's easy to underestimate how big something can become because compounding is so countertop. You see this with covin, which was compound interest at its at its prime like this virus at in the early days is, you know, doubling every day, whatever IT would be.

And that's how you go from, oh, three people are infected in march of twenty twenty two or today. I I don't know anyone who's not had covered. So IT goes from literally three people to the entire world in the blink of an eye.

When it's doubling that quickly, how would you explain IT to kids or adults? Like what is the best way to teach people the power of compound? It's like the one formula. I I tell my kids this when they're a math and they're learning this and sort of create great time, they learn about compounding. And i'm like your teacher is never gna tell you this, but this is the most important formula you're .

probably gona learn that I think I thought about. I know how I explain IT, but just growth feels more growth. It's like the the more you grow, the more fuel you have for more growth. That's that's that's not a very good explanation for IT, but that's that's the thing to rap your head around is like it's uh, it's not what you start with. It's just like how long you're doing IT for.

And it's not even the growth is the duration other yes.

So I said this earlier, how I think about my own investing in philosophy. If I can be average for an above average period of time, that leads to a way above average result. It's not, it's not about like, what are the returns that I can earn this year? If I can earn eight percent returns for fifty years? The results are ridiculous.

The results are absurd. And so maxi zing, the variable that matters, which is time and endurance, you know, all compounding is effectively is returns to the power of time. And so if you understand math that the exponent there is what's doing all the heavy lifting like maxim for that.

But where is all of the effort in the investing industry is in smaller, but it's in returns. How do I increase my returns this year? But I think when you understand like know, all the power, all the wealth, all the leverage is in the enduring just focus on that before you think about anything else that's .

really powerful way to think about IT, let's watch gears and talk about reading and writing. How do you select what you read?

I heard this idea, I think, goes from Patrick ony many years ago, who said, you want a wide fund and a tight filter. I will start reading any book on any topic that looks even mildly interesting to me, but I will slammed shut without mercy and move on to something else if it's not working for me. A lot of the reason that people don't like read, people don't read much as they or if they say i'm i'm not a big reader.

A lot of the reasons, because they feel like morally, that they need to finish every book that they start. And we realize that the majority of but there's four million books for sale on amazon. I bet three point nine million of those are not meant for you or for me.

They meant for other people. But there are not that does not work for what what we want out of them. And if you force yourself to finish every book, your start course is going to be a miserable experience.

But when you, when you are willing to try anything but have a uh a filter that is that just has no mercy to to move on if you don't like IT, that's when you find the great books. Because if you only stick to books that you know you're gonna like about topics that you're interested, you are missing so many other topics out there that you don't even know that you would like. You have to try a million different things, but then cut IT off very quickly if you don't like IT.

So that's how I try to read. If it's even slightly interesting, if someone has said, oh, this is a good I will start reading by the way, kindle samples are free. You have no excuse to not try any book um and and then just mercy ly cut IT off if it's not working for I find this .

really interesting because uh with my oldest who who reads a ton, uh I just put books on his nights and and you know some of them I think you like, some of them I don't think like and he randomly i'll pick them up and he read like an immune system texture class here. yeah. And loved IT. Yes, I think there a lot of like that.

If you ask me right now, would I like to read a book on the immense system? So I know not not really, but there are so many topics like that over the years that I never would have thought that I would like that I started like, this is incredible or it's working for me in that moment. It's a missing puzzle piece in that moment.

There are a couple books that have always been on my go to books that I recommend other people. Oh, this is my favorite ks of all time. A couple of those books I went back and reread and like, they're really not that good.

But at the time that I read them, he was a missing puzo piece that IT was like, perfect for me in that moment yeah even if when I read and now like this book's kind of very basic like not that will write. And so I think that missing puzo piece is true for a lot of people. And that's why, like, you need to read a lot of books because what other people think are good may or mayor may not be the book that moment.

Go back i'm in a kindle cake right now um and i've been in physical a books what I love about kindle is so easy to highlighting go back and search which for me as a writer is really important when i'm writing and like what was that quote from this book? I need to go find that really hard to do that in a physical book, uh, was kindle. It's just so easy.

Do you take them out of the kindle or just leave the highlights .

on the kindle or I use the revise APP and so everything that a highlight, whether it's in a blog poster and winter or IT, goes all into that. David sa is the one who said his read wise feed of all of his highlights is his smart twitter feed. Twitter can be filled with so much garbage and noise, but read wise you can flick through, I think, David, on our city as like twenty eight thousand highlights and he can sit there and scroll IT of these like amazing quotes and andoche over years.

other passages that stick with you or haunt you, that you, that you stop thinking.

But it's my single weird one but I just because of a writer too as you are, i'm a socket for just a well crafted phrase but there is one I forget who wrote this sorry, I can't tell you who wrote this. But IT was a book about, uh, d day and he was talking about this one 啊， this one group, this one one company of soldiers on d day, of whom are many of them died.

And the passage was all of them were prepared to die that day, and all of them did die that day. And that was something has such a beautifully crafted sentence and it's also just haunting in its own way that i'm such a success for that. It's not like I would say, the best story wins. You could phrase that fact that they all died a million different ways. But how whoever the author has phrase that always really stuck with me.

why do you think the best story wins?

What's behind what we're trying to do? And and a lot of times it's just contextualized whatever factor story that was within our own lives. And it's much easier to contextually ze a story than a statistic because there's a human element to a good story.

And I also is just so much easier to remember and stick with you. I don't remember any of the formulas that I was forced to memorize in school, forced to memorize the night before the test. I remember a single one, but every good story that was told something when I was six years old, I still remember.

So because it's just not easy to remember a story than a statistic, and it's easier to contextualize IT within your own life. And because there are so much emotion embedded in IT, stories are like leveraged for good statistics. If you decide there are some statistic, I just said if if I said, uh, first bottome of company e all died on d day, that's a statistic.

But if you phrase that, if you put a name or face to IT, IT becomes a completely different thing. I was used, the example of canberra makes the best documentaries about U. S.

history. And the vast majority of what is in his documentary are already known. The documentation about the civil war. Well, were two.

You know how? What ends? You know what happened? There's not that much new in there, but he is a Better storyteller than I think, any historian and has ever been in history. He can tell a story about the civil war that will literally bring you to tears. Even if you know what happened, you knew what happened, but when you hear the story and see the face and hear the music in the documentary, that will literally bring to tears.

And cAmber's has talked about how important music is in his documentary, the background music, and he said that he will literally edit the screen so that when the naratu says a specific emotional word, IT matches up with a beat in the background music, so that the emotion and the music is literally aligned like that. No other histories is doing that. No, whether he doing does.

And that's why he can create. He has the leverage by telling, by talking about the civil war that no other of the historians were were writing about. The civil work can recreate.

take a few seconds and think about how you would teach me to tell a Better story. You're one of the best story tellers of our generation. Teach me how to tell a story like modern houses.

I think it's two things. One is right for an audience of one, which is yourself. Don't think about other people. Don't think about who's gona read this. Don't think, don't ask yourself, how is the reader going to interpret the sense, write a sentence that moves you, that makes you when you read IT you like, I like that without talking about anyone else.

I think once you start thinking about who is my audience and where are they gonna like you start to panda, and you start to, like, perform for them in a way that is very hard to like, create a good emotional story about just right for yourself. The other is, don't forget how impatient everyone is. So this is a sense where maybe you are thinking about the reader, but everyone is so impatient when they are reading that you just always have to ask yourself, what is the point i'm trying to make? Make that point and get the hell at a people's way and move on to another point.

And most story telling, you lose IT once you lose the reader mart in. He said that he said at one point that when he would edit his work, he would read the allowed to his family would would read the story allowed. And when he saw them getting bored, he would make an nur cut that part, they're clearly dozing off here.

And when he would see their eyes bug out, you, oh, this is a good, this is a good part. And I think mart in was the one who said, leave out the parts that readers tend to skip. That's the key to good writing. Leave out the parts of people tend to skip think that's important to keep in mind to is just right for yourself in a way that you like and get to the point and get out of people's way. After that.

how did you learn the right? You didn't even go to high .

school right when I was at the Molly fall for ten years. That was a ten year period where I was sometimes writing three posts per day, three articles les per day, doing that every day for almost a decade, I wrote thousands and thousands of blog post. And when you write online, people are merciful about the feedback they give you.

Uh, the readers in the comment sections are on twitter will tell you in no uncertain terms, this article was shit and you did a terrible job. Or they say, this was really good. I really enjoyed IT.

So having that level of constant feedback and doing that thousands of times over a decade, i'll turn anyone into A A much Better writer than they worry when they started. So that was that was really what I was made, a combination of of quantity and fierce unvarying ized feedback for matters do test ideas. I think in some ways, you test ideas and twitter.

And if they work, you can turn those ideas into a blog post. And the blog post worked, you can turn them into a book idea or book chapter. That's kind of the natural progression for lot of things.

And just like h is very true. And comedy to even the best comedians, the world class comedians don't necessarily know what's funny until we've tested IT. And this is why George carlin, Chris rock, Jerry science field, they test their new jokes in tiny clubs because even Chris rock does not know what's funny until theyve sted nested IT.

And I think it's true for, uh, writers as well. I've thought a lot of experience with i'll write a blog post on like this is good. This is some of my best work and IT flaps, no one else like that.

And and the opposite is true to the biggest, most popular blog post of ever written were always, ones were when I was writing. And I like that. Know this any good? This is so obvious. It's so boring, it's too personal. No one else is going to care about this that does well. So even after doing this for so many years, I don't know of my ability to find a topic can say like, oh, that's gona turn into a good post is is really that good, which is why you kind of have to test ideas over time.

It's so interesting because pak casta like that too. I'll record, never would be like, oh my god, that was mind blowing and then, you know, three months later, i'll check at the stats and be like, what and record a podcast from like, oh, you know, I was not engaged and I look at the stars like off the chart.

The most popular blog post i've ever win, by far, by like an order of magnitude, was a post in twenty seventeen that I wrote about. I grew up with and still have A A stutter. And when I was a child and teenager, I could barely speak IT was a IT was a very severe stutters when I was a child.

And I couldn't really overcoming to where I can talk you like I do now until I was thirty years old. And so I wrote A A post about this trial called overcoming your demons. And I was the most popular post ever wrote when I published IT.

I literally hit IT from our blog feed because I was like, no one can be interested in this. I lose a little to hidden like the link was out there. But I wasn't even on the fix because I think i'm so embarrassed about this that I would just be writing about a personal thing. No one else cares about this. And I really felt that way, and I turned into the most popular thing ever.

rode to tell scared, to put combination of scared.

Also, the the point of the post was overcoming your demons, that I started with this like profound disability that had such a big impact of my childhood. And I overcame IT, and now I speak on stage and do this kind of podcast. And I felt like he was to look at me, look at me, look at me.

I didn't. I didn't want that. But I think everyone has their demons. You do? I do.

Everyone has something whether like i've got this problem in my life and a lot of those are hidden. People don't talk about them because they're embarrass that I want to talk about. It's too personal. And I think when you are.

Vulnerable and open people love IT because even if you don't start, you're like, oh, I, I, I have this similar, I have this issue, whatever IT would be and like, thank you for telling me that your life was not not perfect and I thank you for being open about the struggles that we all have in our lives, something people like that. But it's a fine baLance between that and being too personal, which vulcar online, or being too bragi egotistical about. Like, look how much I overcame .

import. Some people use vulnerabilities strategically.

Yes, you can tell. No, there is that linked in post. A year two ago of IT was a founder, and he said, I just had to lay off alf, my company. And he included a picture of him with a tears running down its base. And people are like, that's terrible you like, shame on you for just trying to like, pull up the heart strings and say, like, oh, i'm so empathetic that I cry and if you like, it's actually a hard baLance between like why why did my stand post work but that picture was just univerSally banned. It's it's a baLance, but I think it's hard to know where you cross the line there.

I want to come back to the and first, second, what did they know about telling stories that we should learn from them?

I forget who says this, and this is not a direct quote and paraphrase and going to do a much poor job of paragon. And it's like comedy is a way to show your smart without being arrogant, something like that. That's not the point of doing to a bad job periphery this.

But I I, I honestly think that the best comedians are the some, the smartest people in society. They understand psychology. George carson understood psychology, I think Better than done. And that's a big statement. But I think that I think that is actually true.

They are so smart and understanding how the world works, what what makes people take, how people think but they're doing and in a way where they don't want to just impress you with their intelligence, they want to make you laugh. What could be Better than that? And so i'll give you to one example, my favor, George.

Car online, he says, have you ever noticed that everyone driving slower than you as an idiot and everyone driving faster than you as a maniac? It's funny. But be is like a that is if you think about that profound and understand like how like relative views of other people will not.

And so there are, I think they are absolute genius, but they want to deliver in a way, rather than using big words to say, like, look how smart and there's one make you laugh. And they are also because particularly for like a Young comic, if they are not making you laughed quickly, they're gonna get boot off stage. So they are the epidemic one liner, or just like so, succeed in their delivery, so extinct in their writing, because they don't have the luxury that a lot of authors do of like the right seven thousand word chapter A A committee on stage. I if you don't take me laugh, every ten seconds you're going to get boot off.

It's interesting because you you mention psychology there there, the keen observers of human nature and psychology. And all we've talked about today, we've talked about the through the lens of money, but it's basically psychology.

I think a lot of things in life fall under the umbrella of how do people make decisions around uncertainty, risk and lack of information. And that is health, that is politics, that is friendships and marriages. And it's also money. A lot of things fAllen over the same umbrella.

There is a study of like how do people behave? And one of the things I think is important here is that you can learn so much about money by studying and reading fields that have nothing to do with money. I think you can learn more about money by reading about politics, military history, biology, sociology. Then you will be reading a finance book because you're just trying to figure out how do people make decisions, how do you make decisions and how do other people make decisions. And by a large, you're not gona learn that in an economic textbook, but you will learn about IT by reading all these other fields that have nothing to do with money.

What's your process for writing?

I I don't think this is a good advice. So if you're a rider out there, i'm not saying this is the right way to do IT. But one of the things that I do that I think is is not common is I write by the time I get to the bottom of a post is pretty much the final draft, not because I can write a final draft in, in, in, in, in one shot, but because I, biology, don't move on to the next sentence until i'm satisfied with the previous one.

Most writers, most very good writers, would do the opposite. They say, your first draft should just be a brain dump and then you go back and edit them. That's not for whatever reasons. Never really worked for me. So now the other thing is I can't say I think I get too anxious and jittery sitting for too long.

So sometimes, all right, one sentence, when i'm satisfied with IT, i'll get up and let go do the laundry and come back and write two more sentences and they'll go do the dishes or walk my dog or something. So it's very spread like that. And I think that contrast with a lot of writers were like, oh, I sit down, I can dump five thousand words on the page and then I go back and edit IT that is probably the the best advice is just like that's what you should do and it's for whatever .

reason this is should .

I think that um most writers that I look up to, I think a much Better writers than I do IT the opposite.

How do you hook people you're one of the best at sort of you and James clear the two people who, uh you know the first sentence to your program and sort of like the first part of your story really pulls people and what would what you what you think you do differently.

And it's a constant reminder of how patient people and if you don't hold them in five seconds, you're gone. And I know that because i'm a bigger atter. And if you don't hold me five second and I probably got unless you are like a an author who I really know that I I will give you a little bit more lead to be like OK like I don't know where your articles going, but i'm going to stick with you because I like you if you're not that you ve got five seconds to catch your attention or else you're out of there.

And I think that is a is easy to overlook that that it's not just being succinct, uh, you know in in the core of your article, but it's uh it's it's hoel's like an invert perim in the it's like people are most impatient in the first two senses. So you think to be the way around, they would get impatient after they have worked the way through article. They are getting bored.

I know they're most impatient at the top and there's there's a lot of data that can be very disparting for authors. There's a mathematician who looked at kindle highlight data and he used highlights as a proxy for how far people making in a book. And the assumption was when people stop a highlighting and candle, they probably stop reading.

And he showed that even among best selling books, the most popular the average reader makes like a quarter of the way through that's in the best sellers that's in the good books a quarter way through they're done. And so just always reminding yourself how in patient people are is just like what's your point? Make your point and get the how out of people's way. I I think twitter has made people Better writers because the character account limitation has forced people to be like you have two sentences to tell me your idea. And that's that's actually, I think that's been a great thing overall .

for making people more success.

What makes a good luck? IT could be a lot of things. I think I could be funny. IT could be profound.

We think we are talking about this last night, about after I fea who said, IT that you like good writing fits one of the acronis of, like, O M G L O L. You I like something like that. This should be shocking or funny or profound or scary, something like that. That's .

gonna .

with two questions.

So one you you can um leave everybody some parting wisdom on money and life. What would you be?

I think the most important is to realize how person IT is and therefore you really got to be careful taking your cues from other people. You and I again, same same age, same like you like going on the list, and I are very somewhere people have very different views about what to do with money. And that is fine.

Just like you and I might have different views about food. You like this food. I like that doing mean that you're wrong, just got a different taste. People understand that with food, but there is A A common sense with money that there is one right answer for everybody. And I so I think you really have to be inro's cable and look in the mirror to say, like what works for myself and my own family. And even if there are holes and flaws and other people disagree with that, if that works well for me, that's that's as good as you can do.

That's an important thing. In final question, what is success to you?

I heard I think jim, oh, honey sy said, uh, that his goal as a parent was not to raise good kids. IT was to raise good adults. He wanted to be the kind of father that when his kids became adults that who were well baLance that's different. Raising good kids, you want to raise good adults. So that would be a big like maybe the top box to check in my life is looking back and being like, my wife and I did our best to crut to raise kids that became good self sufficient well baLance to polite, happy adults.

Thank you very.

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