Page 105 - Morgan Housel - The Psychology of Money_ Timeless Lessons on Wealth, Greed, and Happiness-Harriman House Limited (2020)

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More importantly, the value of wealth is relative to what you need.

Say you and I have the same net worth.

And say you’re a better investor than me. I can earn 8% annual returns and
you can earn 12% annual returns.

But I’m more efficient with my money. Let’s say I need half as much
money to be happy while your lifestyle compounds as fast as your assets.

I’m better off than you are, despite being a worse investor. I’m getting more
benefit from my investments despite lower returns.

The same is true for incomes. Learning to be happy with less money creates
a gap between what you have and what you want—similar to the gap you

get from growing your paycheck, but easier and more in your control.

A high savings rate means having lower expenses than you otherwise could,
and having lower expenses means your savings go farther than they would
if you spent more.

Think about this in the context of how much time and effort goes into
achieving 0.1% of annual investment outperformance—millions of hours of
research, tens of billions of dollars of effort from professionals—and it’s
easy to see what’s potentially more important or worth chasing.

There are professional investors who grind 80 hours a week to add a tenth
of a percentage point to their returns when there are two or three full

percentage points of lifestyle bloat in their finances that can be exploited
with less effort.

Big investment returns and fat paychecks are amazing when they can be
achieved, and some can achieve them. But the fact that there’s so much
effort put into one side of the finance equation and so little put into the
other is an opportunity for most people.