Morgan Housel: What You Need to Master (And Avoid) to Get Rich, Stay Rich, and Build Wealth

The skills it takes to get rich are drastically different from the skills it takes to stay rich. Few understand this phenomenon more than Morgan Housel. In this conversation, Shane and Housel discuss various aspects of risk-taking, wealth accumulation, and financial independence. Morgan explains the importance of understanding personal financial goals and the dangers of social comparison, lets everyone in on his personal financial “mistake” that instantly made him sleep better at night, and why the poorest people in the world disproportionately play the lottery—and why it makes sense that they do. They also touch on the influence of upbringing on financial behaviors, the difference between being rich and wealthy, and the critical role of compounding in financial success. Of course, we can’t have a writer as good as Morgan Housel on the podcast and not ask him about his process, so Housel concludes with insights into storytelling, his writing processes, and the importance of leading by example in teaching financial values to children. 00:00 - Intro 01:20 - Risk and income 04:14 - On luck and skill 06:44 - Buffett's secret strategy 09:02 - The one trait you need to build wealth 12:54 - Housel's capital allocation strategy 13:22 - Index funds, explained 17:33 - Expectations and moving goalposts 18:51 - Your house: asset or liability? 24:13 - Money lies we believe 28:46 - How to avoid status games 31:38 - Money rules from parents 36:49 - Rich vs. wealthy 38:20 - Housel's influential role models 39:22 - Why are rich people miserable? 42:33 - How success sows the seeds of average performance 46:24 - On risk 47:33 - Making money, spending money, saving money 49:24 - How the Vanderbilt's squandered their wealth 1:00:45 - How to manage your expectations 01:03:00 - How to talk to kids about money 01:06:26 - The biggest risk to capitalism 01:10:30 - The magic of compounding 01:12:52 - How Morgan reads 01:19:16 - How to tell the best story 01:21:16 - How Morgan writes 01:32:16 - Parting wisdom and thoughts on success The Brain Food newsletter delivers actionable insights and thoughtful ideas every Sunday you can immediately apply to business and life. https://fs.blog/newsletter/ My New York Times Bestselling book: Clear Thinking (https://geni.us/FG4odAE) The encyclopedia of big ideas from the big disciplines https://fs.blog/tgmm/ Follow me: Twitter: https://x.com/ShaneAParrish Instagram: https://www.instagram.com/farnamstreet Linkedin: https://www.linkedin.com/in/shane-parrish-050a2183/ ABOUT THE KNOWLEDGE PROJECT Like the mentor you’ve always dreamed of having, The Knowledge Project shares timely yet timeless lessons for work and life. Past guests include Naval Ravikant, Andrew Huberman, Daniel Kahneman, Jim Collins, Esther Perel, Patrick Collison, and more.