Item: People Who Think Get Rich First
Rating: 4
Author: Paul Lai

If we’re rational enough, we should first calculate how much money we’ll need in the future, then set aside a certain amount every month. The problem is that the intention to save keeps getting interrupted by the urge to spend. We know our own weaknesses, so setting up automatic investing—having money deducted from your bank account every month—is a great way to force yourself to save.
Investors often extrapolate the future from past performance, whether it’s the overall market or individual stocks. The more a stock price rises, the more people believe it will keep rising—but that can’t go on forever.
Many employees buy large amounts of their own company’s stock, while Silicon Valley workers often end up holding lots of tech stocks. This approach of “invest in what you know” may feel reassuring, but the risk is far higher than you imagine. Put simply: if your income is tightly tied to a particular industry, don’t also bet your savings heavily on that same industry and push your risk even higher.
Money is stored energy. It can give you freedom, options, a sense of security, and independence.
If you’re forced into early retirement, there isn’t actually much you can do at that point. But you can start thinking now: Where will your living expenses in retirement come from? And what do you want to do after leaving the workforce? You could be forced to retire at any time, so prepare as much as possible.
Life planning is always more important than investment planning—something Jonathan Clements emphasizes again and again. This book was written across different eras, but you’ll find every viewpoint in it still holds true today, because markets change; human nature doesn’t.

People Who Think Get Rich First

My notes