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If we have the same assets and I can earn an 8% annual returns, and you can earn 12% annual returns, but I need half as much money to be happy while … - Morgan Housel
" "If we have the same assets and I can earn an 8% annual returns, and you can earn 12% annual returns, but I need half as much money to be happy while your lifestyle compounds as fast as your assets, I'm better off than you are. I'm getting more benefit from my investments despite lower returns.
Think about that in the context of how much time and effort goes into achieving 0.1% of annual outperformance in this business – millions of hours of research, tens of billions of dollars of effort – and it's easy to see what's potentially more important or worth chasing.
There are investors who grind 80 hours a week to add 10 basis points to their returns when there are two or three full percentage points of lifestyle bloat in their finances that can be exploited with less effort. Outperformance is amazing when it can be achieved, and some can achieve a lot of it. But the fact that there's so much effort put into one side of the finance equation and so little put into other is an opportunity for most people, companies, and countries.
This is not about living like a monk, hampered by frugality. It holds true at every level of wealth and spending. The value of all money is relative to expectations… The idea that reducing your needs has the same impact as increasing your income – but the former is more certain and in your control than the latter, so it has a higher expected value – is as true for someone spending $15,000 a year as it is someone spending $15 million per year.
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Additional quotes by Morgan Housel
When asked about his silence during meetings, Rockefeller often recited a poem: A wise old owl lived in an oak,
The more he saw the less he spoke,
The less he spoke, the more he heard,
Why aren’t we all like that wise old bird? Rockefeller was a strange guy. But he figured out something that now applies to tens of millions of workers. Rockefeller’s job wasn’t to drill wells, load trains, or move barrels. It was to think and make good decisions. Rockefeller’s product — his deliverable — wasn’t what he did with his hands, or even his words. It was what he figured out inside his head. So that’s where
Expiring knowledge catches more attention than it should for two reasons: one, there's a lot it. Eager to keep our short attention spans occupied. Two, we chase it down. Anxious to squeeze insight out of it before it loses relevance. Permanent information is harder to notice because it's buried in books rather than blasted in headlines. But it's benefit is huge. It's not just hat permanent information never expires, letting you accumulate it, it also compounds over it, leveraging off what you've already learned. Expiring information tells you what happened. Permanent information tells you WHY something happened and is likely to happen again. That WHY can translate into stuff you know about other topics, which is where the compounding comes in. I read newspapers and books everyday. I cannot recall one damn thing I read in a newspaper from say 2011, but I can tell you in great detail about books I read in 2011 and how they changed the way I think.
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