THE PSYCHOLOGY OF MONEY - BOOK IMPRESSIONS

The Psychology of Money written by Morgan Housel is a short description of human behavior when it comes to money.

It is a short book which has chapters that deals with different human behavioral topics and can also be read individually. The penultimate chapter provides a brief but accurate summary of all the chapters and also deals with the author's personal investing choices.

The contents of the book look at the broad behavioral patterns and try to link it with the world of investment and finance. The book largely takes a case study approach and provides various real life examples when describing a particular situation.

General topics like ‘Power of Time in Compounding’ and ‘Optimism and Pessimism’ are discussed along with nuanced topics like ‘Our thinking regarding other’s Wealth’. The author emphasizes the role of history affecting our decisions and how it is a very human trait to hold reasonable thinking over rational thinking when it comes to financial decisions.

This book explains the concepts of financial crises, recessions and bubbles extremely well for a novice person. It specifically takes into account how relatively unrelated events can cause a chain reaction and shape the world as we know today.

For the post-script, there is a well explained timeline of 'American public's thinking' regarding finance & savings and how it changed since WW-II. It marks important highlights and induces curiosity in the reader to know more.

Overall this book is a good read for a person trying to understand finance through the minds of people who actively work in the domain.

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