I wish I read Morgan Hel's book, The

Psychology of Money, 15 years ago,

because apparently the meat verse is not

the same thing as the metaverse. And

that $6,000 I'll probably never get

back. So, in this video, I'm going to

summarize the book for you so that you

don't end up making the same mistakes I

did. And Hel's first big lesson from the

book is the secret behind how exactly

Warren Buffett used the stock market to

become one of the richest people in the

world. So, when this book was written in

the year 2020, Buffett's net worth was

around $84 billion. At the time I'm

recording this video in 2025, his net

worth is double that, $153 billion. And

out of that $153 billion,

152.9 billion were made after his 50th

birthday. Buffett's biggest secret

advantage wasn't being a genius stock

picker. Cuz there's plenty of other

investors who have a way better track

record than Buffett, like hedge fund

manager Jim Simmons, who earned an

insane 66% annual return on his

investments since the late 1980s. But

even though Simmons was a way better

investor, he still looks like a starving

peasant compared to Buffett. Cuz his net

worth is 80% less than Buffett's. And

the reason for that is cuz he didn't

really start successfully investing

until he was around 50 years old. While

Buffett's been letting his investments

grow and compound since he was 10 years

old. Most people understand like, "Yeah,

yeah, compound interest is great. Time

in the market is important. Yeah,

great." But they don't actually

understand like the true power of it.

>> Anakin, we need to sell off some of our

investments to pay for the Jedi holiday

office party.

>> No, Obi-Wan, you don't understand the

power of the dark side of compound

interest.

>> It's like trying to explain to your

grandmother how powerful Chad GBT is.

And she thinks it's pretty cool cuz like

it's voice mode can tell her the daily

news of what's going on in her hometown

in Usbekiststan, but she doesn't like

really get it. like how it autogenerates

2,000 lines of code for you at your

software engineering job and lets you

accomplish three months of work in one

afternoon and how your boss doesn't even

know that you're using chat GPT and how

he also doesn't even know that you're

done with all your work 3 months ahead

of schedule. Anyways, compound interest

is the same thing. Let's say you're a

pretty good investor and you can double

your money every 5 years. Or for easy

math, let's just say you 5x your money

every 10 years, which is the same

performance you would have gotten if you

just invested in a NASDAQ 100 index fund

for the last 10 years. And you start

with $1 million at 40 years old. By the

time you're 50, that $1 million would

become 5 million. By 60, 5 million

becomes 25 million. By 70, 25 million

becomes 125 million. And by 80, $125

million becomes 625 million. But let's

say that you invested that $1 million

when you were just 20 years old instead

of 40. Then you'd reach $625 million by

60 years old instead of 80. By 70 years

old, that 625 million becomes 3.1

billion. And by 80 years old, that 3.1

billion becomes $15.6

billion. So you have two identical

people with identical investment skill

and performance. One person has over $15

billion, while the other person barely

reaches half a billion. The only

difference between these two people is

how early in their life they started

investing. And compound interest plus

time took it from there. And look,

before you start ripping me a new one in

the comments, I get it. Okay? You know,

these are ridiculous numbers. Nobody has

a million bucks to invest at 20 years

old, and nobody needs 15 billion at 80

years old to be happy. It's not the

point. It's just an example to

illustrate how powerful compound

interest becomes when you give it enough

time. You can pretty easily retire early

and live a ballerass life with way less

money than $15.6 billion. And if you

start investing as early as possible,

compound interest is going to be your

best friend. So waiting until your 40s

or 50s to start taking advantage of

compound interest is like getting a

magic witch's broom and just using it to

sweep the dust around your house. But at

the same time, it's also really

important to have balance in your life.

You don't want to just eat Top Ramen and

live in someone's closet for your entire

20s cuz that's how you end up like Mr.

Meeks.

>> Existence is pain, but none of us can

die until our job is done.

>> So, Howell talks about a great way you

can figure out what that perfect balance

is. Before you spend money on something,

think about whether what you're about to

buy will bring you more happiness than

the happiness you'd get by achieving

financial freedom while you're young and

never having to work again because you

can just live off your investments. If

it's going out to a nice dinner with

your friends, that might actually

totally make sense because you don't

want to end up rich in a loan. But if

you're spending $400 a month on taquitos

from 7-Eleven, lease payments on your

Hellcat, and three of subscriptions, you

might be better off just investing that

money in the S&P 500. How basically says

that investing is like a lot of other

good things in life. Sometimes for the

really good stuff, you got to pay an

admissions fee to get in, like a top

university or the British Pencil Museum

in Kzwick. Because even if you

experience a short-term loss upfront,

the idea is that in the long run, you'll

come out way ahead. And the admissions

fees in investing are more psychological

than anything. There's the emotional

toll you got to deal with when the

market tanks 20% and you see 3 years of

your allowance savings wiped in like 3

weeks. Cuz even though on average the

stock market has historically produced 8

to 10% returns a year, you got to

remember that that's an average. Some

years it goes up 40%, some years it goes

down 20%. Now, people who don't pay this

toll never have to deal with the pain of

experiencing a 20% loss in the market,

but they also resign themselves to never

earning more than a percent or two a

year in their bank savings account. And

then there's the mental toll of making

sure that you're always staying

extremely disciplined with stuff like

budgeting your expenses so you have

leftover income to invest, following

solid investment principles like dollar

cost averaging consistently into strong

businesses with predictable cash flows,

and making sure that you never put

yourself in a situation where after a

long night with a bottle, you let your

greedy eyes wander to a couple of sneaky

has like penny stock newsletters or

courses teaching some weird BS like day

trading bin. binary options where they

promise you 800% returns, but in

reality, they just steal your credit

card after you fall asleep from the

cloudy lemonade they offered you. How

also talks about how it can be socially

difficult to stay financially smart,

too. Cuz if there's one thing we've

learned from 145 years of studying human

psychology from the very first lab in

Leapig, Germany, run by Wilhelm Woot,

it's that humans love flexing on people.

That's why men buy Lambos and women want

to get two karat diamond rings. But how

has a really good thought experiment you

can do that helps you break free from

that kind of thinking. He's like, "If

you think that driving around in a

Ferrari will make you look cool. Just

think about the last time you saw

someone else with those things." Did you

think, "Damn, that guy was so cool." Or

did you just think about how much you

want your own Ferrari? When it comes to

fancy material things, people admire the

thing itself, not the person who owns

it. So when it comes to big expensive

purchases, you got to be really careful

in thinking about the real reason for

why you actually want to buy that thing.

And if you still want to buy expensive

stuff, like you can totally do that. But

how offers a good strategy on how to do

it. He basically suggests that you

should never buy expensive luxury things

with money you earn from your job. Any

extra money you earn from your job

should go to investments. And then once

your investments start making money,

then you can spend your investment

profits on luxury things if you really

want them. It's like the financial

equivalent of eating your vegetables

before dessert. Now, at this point, the

vast majority of my net worth is from

stocks, cuz I started working at 16

years old as a cashier at a grocery

store, although I did get promoted to

the seafood department after a year. And

I've been putting a portion of my

paychecks into stocks for pretty much as

long as I can remember. And apart from

like a 6-month emergency fund, 99% of my

net worth has always just been invested

in the markets. But I really try to

avoid talking about that with any

friends or family members who aren't

educated in finance. Because even though

over the last decade I've earned

anywhere from 500 to a,000% returns on a

lot of my investments, when I tell that

to people who don't understand stocks,

they always say something like, you

know, Bobby, you should sell now while

you're ahead. You're playing with fire

in the stock market casino. So for

people who aren't wellversed in personal

finance, why is the default attitude

about stocks one of pessimism instead of

optimism or curiosity? And Morgan Howell

has a really good take on this in the

book where he basically talks about how

good things take time to happen while

bad things can happen overnight. Like

over 16 million flights go perfectly

fine in the United States every year,

but you'll never see a news article that

says

>> breaking news. 16 million flights were

safely taken last year. But the moment

there's a single plane crash, it's all

over the news and people start freaking

out. It's the same thing with stocks.

Whenever there's a major market crash

once every 5 to 7 years, where the

market drops like 20% over a few months,

it's all over the news and everyone

panics and you start getting unsolicited

comments from people in the peanut

gallery who don't even invest. But when

the market slowly rises, like 0.2% 2% a

day on average for 3 years. It never

makes the news that stocks rose 200%

over the last 3 years because it happens

so gradually over a long period of time.

And so for people who aren't really well

educated in this area, the only

information they ever get about stocks

is from major news events. And that news

is almost always negative. And that's

why Hel says you got to have a lot more

empathy for people and avoid judging

them for their views on money and

investing even if their views don't

align with yours. Because two people can

have wildly different emotions about the

same topic because of their lived

experience and how that shaped their

psychological mindset. Like one person

might associate February 14th with the

day their spouse proposed to them.

Another person might associate it with

the same Valentine's Day massacre. If

someone was born in the 1970s, they're

going to have really positive emotions

about the stock market because during

their teens and 20s, the stock market

increased 10fold. If someone was born in

the 1950s, it's the complete opposite.

They'll be terrified of stocks because

in their teens and 20s, the stock market

basically stayed flat and then went

negative. Both people might be equally

intelligent and educated, but because of

their lived experience, they're going to

naturally have different biases when it

comes to the topic of stocks. How has a

really great quote on this in the book

where he says, "Your personal

experiences with money make up maybe

0.00001% 0000001%

of what's happened in the world, but

they make up 80% of how you think the

world works. The takeaway here is that

even if you're really well educated in

personal finance and you're 10,000%

confident that Dogecoin and AMC stock

will triple in the next 10 years, you

should still stop harassing your uncle

about putting his life savings in them

when all he's trying to do is get you to

pass the mashed potatoes at dinner. And

on the topic of empathizing, Hel also

talks about making sure that you never

let hubris and arrogance make you forget

about how big of a factor luck really

is. So in 1968, before Bill Gates

started allegedly cheating on his wife,

he actually attended a really fancy high

school in Seattle called Lakeside, which

only had like 300 students and was one

of the only high schools in the world

that gave kids access to a super

advanced computer. Like the chances of

going to a high school like that were

literally one in a million. you had a

better chance of developing meotheloma

from the asbestous in the walls than

going to a high school with an advanced

computer in the '60s. Now, even before

Lakeside, Bill Gates was obviously super

intelligent and hardworking. But going

to this specific school also gave him an

additional 1 ina million competitive

advantage when it came to computers,

which was one of the main reasons that

he and his classmate Paul Allen were

able to launch Microsoft, which is now a

multi-trillion dollar company. Old Billy

Boy doesn't even deny this either. like

is clearly stated that quote if there

was no Lakeside High School there would

be no Microsoft and that luck goes both

ways like everybody knows Bill Gates

cultured people know Paul Allen but only

the real OGs know about Kent Evans who

would have been the third founder of

Microsoft but he never had the chance to

cuz he passed away in a mountaineering

accident. The point is that obviously

hard work and intelligence play a huge

role in winning at life, but don't be so

hard on yourself if you're still having

a rough go at it because there's so many

other factors that also play a really

important role like education, mentors,

whether your stepdad was a positive

influence in your life. Your peer group,

your health, where and when you were

born, and whether your first taste of

responsibility looked more like a paper

route or more like helping your stepdad

hide his DUIs. Now, interestingly

enough, and a lot of people don't know

this, but Bernie Maidoff was actually

already extremely rich even before the

whole Ponzi scheme thing. And if you

don't know who Bernie Maidoff is, he's

basically the 2008 Wall Street

equivalent of P. Diddy. He already had

like tens of millions of dollars. But it

wasn't enough for him to be successful.

Others must also fail. So, he tricked a

bunch of old retirees into trusting him

with the culmination of their life's

work. He spent half their money, lost

the rest of it, and ended up getting

sentenced to 150 years in federal

prison. Listen, Jerry. I got a great new

investment opportunity for you, and I'm

calling you first cuz you're my favorite

client. It's called the Meatverse.

>> What's that? You mean the metaverse?

>> No, Jerry, the meat verse. It's even

better. Listen, Jerry, I need you to

wire me all of your wife's inheritance

money, Jerry. Do you understand what I'm

saying to you?

>> Uh, I don't know about that, Burn. I've

already kind of given you a lot.

>> Wire me all of it, Jerry. It's a sure

thing. I'm telling you, Jerry

>> Howell's lesson here is that having big

goals is great, but make sure that you

don't keep moving the goalpost every

time you reach a goal. You should spend

some time figuring out what specifically

would make you happy in life. Go get

those things and then once you have

them, just enjoy them and be happy. He's

got a really great quote in the book

where he says, "There's no reason to

risk what you have and need for what you

don't have and don't need." Now,

unfortunately, I have a really hard time

following that last piece of advice, cuz

I'm literally working on a video right

now about how I plan to yeet myself into

either billionaire status or bankruptcy

in the next recession. The only way

you're going to find out about that

video when it comes out is if you hit

both the subscribe button and the bell

icon to get notifications. Hitting

subscribe without hitting the bell icon

is like contributing 20% of your income

to your retirement accounts, but

forgetting to actually invest it in

anything. So, it just sits there rotting

in a cash account earning 0% interest,

decaying to the ravages of time and

inflation.

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