The Psychology of Money and Building a Base

What does this mean? 

I recently re-read "The Psychology of Money"

If you have not done so yet, give it a go, very worthwhile 

Chapter 5 - Getting Wealthy, Versus Staying Wealthy 

One of the key messages here is that to sustain wealth 

You need to not ‘strike out’ 

Striking out is to put yourself in such a position where you may lose what you have 

By over stretching, or taking a punt on something that you do not fully understand 

He says a large part about staying wealthy is just not losing it on bad decisions 

In order to ‘win’ the game of wealth/life, you need to keep playing it:

Don’t strike out

Don’t have to start again

Don’t have to re-build 

Stay in the game

Just keep making consistently good decisions that move you forward 

A few key takeaways for me;

Getting money is one part of the equation, keeping it is the other

Very few gains are ever worth risking so much that you get wiped out/strike out.

Learn from what Warren Buffet didn’t do;

Didn’t get carried away with debt

Didn’t panic sell during 14 recessions he lived through

Didn’t risk his business reputation trying to cut corners

Didn’t attach himself to one world view or one belief.

Didn’t rely on others for money decisions

Didn’t burn himself out or quit or retire.

As opposed to constantly seeking big gains, have a Survival Mindset:

Be Financially Unbreakable more than chasing big gains

Planning is important but also have a plan for when your plan doesn’t work.

Optimistic Future Outlook, with paranoid short-term view.

How does this fit into property?

The past two weeks I have been on the road, meeting people in Dubai, Qatar, Riyadh and NEOM (lovely

pic below of my drive through the desert) 

One of the common themes has been buying in ‘higher growth’ locations

Dubai, South America and Asia have been common themes

Yes, these are all potential good locations to buy as part of a long term portfolio 

But not as a starter property or first purchase

You should build a ‘base’ of solid, stable, unsexy property before becoming more adventurous 

Property that you know will do well over 20 years 

Property that will be consistently good, not occasionally great 

Property that sets you up for the future now, regardless of what happens in the meantime

For me, this is the UK 

Create a solid, stable base, that then allows you to take bigger risks further down the line

If the bigger risks do not go according to plan

If you do strike out

Then it is not a ‘game over’ scenario:

you have your solid base.

Think a friend would like this? Forward it their way.

Have a great weekend ahead,

Callum