The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness by Morgan Housel

Due to the concept of outliers, you can be wrong more often than not and still win big when it comes to investing. Disney, for example, spent a lot of money and made a lot of cartoons in the 1930s that were losers. Snow White, however, was such a big hit that it more than made up for all of the losers. Venture Capitalists expect most of the companies they invest in to lose money. It’s the small percentage of companies that are big winners that more than pay the bills. Forty percent of the Russell 3000 are essentially failures. Investing in this index is profitable as the top 7% tend to be big winners.

Having a strong sense of control over things in your life is the best indicator of happiness. We are wealthier than we were decades ago, but not any happier. We spend money on expensive stuff and bigger houses, which doesn’t bring more happiness. (Doug: It think the message here is don’t change your lifestyle to match all of the money you make.) Try to have a big safety net so you feel more in control

If you want respect and admiration, don’t think that you will get it by showing off fancy stuff that you own. Humility, kindness, and empathy will earn you more respect than the horsepower under the hood of a fancy car ever will.

If you spend money on things you will end up with things and not money. The only way to get wealthy is to not spend the money you have. Wealth is hidden. It’s income not spent. It takes restraint to become wealthy. Financial assents not spent will give you freedom and flexibility.

To be wealthy you need to be frugal. Wealth is what is left over after you spend what you spend. The key is to let your money compound, not your lifestyle. Once you buy the basics, there is another layer of basics that make you more comfortable and happy. Beyond that you are just spending to show off.
It’s ok to save for goals like a down payment on a house or retirement, but you want to get into the habit of saving for the sake of saving. Having some wealth is also a hedge against the negative things that life can throw at you. It will also give you the flexibility to pounce on financial opportunities that arise and the freedom to change your career course on your own terms. The biggest benefit may be the freedom from worry.

Do not aim to be coldly rational. Rather, aim to be pretty reasonable. The rational approach would say to leverage your investing with two dollars of debt to one dollar of your own money when you are young. If you do, you will go through periods of boom and bust, but the math says you will win in the long run. It’s a rational strategy, but almost absurdly unreasonable.
Historical odds if your investments increasing are 50/50 over one day, 68% over a year, 88% over ten years, and 100% over twenty years. For most investors, day trading and picking individual stocks is not rational. You are highly likely to lose. Investing should have a social component that you talk over with your spouse and work friends.