Sharing Volumes – Book Club Mash-Up 2023

Encouraging a love of learning is like investing in personal growth. We’re excited about the reception that we received when we began our Treehouse Wealth Book Club this year. During this season of giving, we’d like to recap the books we read throughout the year. We hope this list will spark some gift ideas to foster new ways of thinking, resilience, and a brighter future for everyone.

“The Psychology of Money” by Morgan Housel

“The Psychology of Money” explores the psychological biases and emotional pitfalls that can influence our financial decisions and offers insights and strategies for gaining a more precise and confident understanding of our money. Housel explores the psychological foundations of wealth, greed, and happiness. By understanding how human behavior affects investment and retirement planning, people can learn to harness the power of their minds and avoid common mistakes associated with fear or greed. We came away with four key concepts that resonated with us: 

#1: Wealth is what you don’t see. Material objects have nothing to do with wealth but show us the opposite. They are a demonstration of spending, not accumulating, assets. They are a sign of money that has already been spent. Building wealth is what happens behind the scenes.

#2: Beware of taking financial cues from people playing a different game than you are. Wealth is the money that you choose not to spend, what you choose to save. This is hard because these signs of spending (or what we previously thought of as wealth) are all around us, and it can be easy to get caught up in these signals of social status.

#3: Small decisions can have a significant impact. Small, seemingly insignificant financial decisions can have an outsized effect in the long run. A small but consistent saving habit can grow exponentially over time through the power of compounding, leading to wealth accumulation.

#4: The hardest financial skill is getting the goalpost to stop moving. Personal finance is less about mathematical formulas and more about human behavior. Financial success and long-term wealth accumulation result from positive, lifelong habits, such as saving, living within our means, and being disciplined in investment decisions.

“Factfulness: Ten Reasons We’re Wrong About the World – and Why Things Are Better Than You Think” by Hans Rosling, Ola Rosling, and Anna Rosling Rönnlund

The authors of “Factfulness: Ten Reasons We’re Wrong About the World – and Why Things Are Better Than You Think” present ten “instincts” that impact how we see the world and provide strategies to help us think more clearly. The book provides guidance for thinking critically about the “facts” we hear every day. As we navigate through the barrage of media we all experience daily, understanding our instinctual biases helps us to avoid common pitfalls and make better decisions. The ten instincts that resonated with us: 

1. The Gap Instinct: People tend to divide the world into two opposing categories: rich and poor, healthy and unhealthy, etc. In reality, most people are in the ‘middle.
2. The Negativity Instinct: Negative news captures our attention, but this focus obscures many positive trends in global development.
3. The Straight Line Instinct: People often assume that trends will continue in a straight line, ignoring potential limits to growth or change.
4. The Fear Instinct: We overestimate risks due to our evolutionary inclination to pay attention to potential dangers.
5. The Size Instinct: We often get proportions wrong, overestimating the importance of single events or numbers.
6. The Generalization Instinct: Overgeneralization leads to stereotypes and ignores the diversity within groups.
7. The Destiny Instinct: Belief that innate characteristics determine the destinies of countries, religions, or cultures can lead to inaccuracies.
8. The Single Perspective Instinct: Single answers or solutions are often inadequate for addressing complex issues.
9. The Blame Instinct: Finding a scapegoat is easier than understanding complex problems.
10. The Urgency Instinct: Acting with urgency can prevent us from thinking clearly and making well-informed decisions.
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“Think Again: The Power of Knowing What You Don’t Know” by Adam Grant

In “Think Again: The Power of Knowing What You Don’t Know,” Grant challenges us to reassess our beliefs, opinions, and thought processes. The book unravels the faulty thinking patterns that hinder personal and professional growth, prompting us to adopt a more agile mindset characterized by curiosity and humility.

Think Like a Scientist is one of the key concepts of the book. According to Grant, when we come to an idea, whether new or closely held, we should approach it as a scientist. When we approach a problem or belief as a scientist, we come with curiosity and openness to learning something new, searching for reasons we may be wrong versus just reasons why we are right. Seeking out opposing views or new theories as a scientist helps us form the strongest view. After all, if the world is constantly changing, shouldn’t our ideas and beliefs be adapting too?

The second key concept centers around Interpersonal and Collective Rethinking. Our society makes greater advances and adapts to change more efficiently when we, as a society, are more open to putting our heads together and rethinking the way things have been done historically.

So, What Does This Have to Do with Money? Everything, of course! At Treehouse Wealth, we strongly believe that each client is unique. And that each portfolio is collaboratively crafted over time. As a team, we constantly challenge each other to read the latest research on portfolio construction, the psychology of money, personality traits, and financial preferences. We try to avoid getting too attached to ideas and bogged down in our beliefs.

Final Thoughts

If you couldn’t attend our Treehouse Book Club this year, we hope you consider joining us in 2024. We feature upcoming book club events in our monthly newsletter. You can find the sign-up form at the bottom of our blog post pages if you’re not signed up to receive it. For more ideas and insights into holiday gift giving, please review our Holiday Gift Guide: Personal Finance Edition. We wish you the most joyous of holiday seasons!