The Almanack of Naval Ravikant: A Guide to Wealth and Happiness by Eric Jorgenson
(or Amazon Link for a physical copy)
A bible based on Naval. Understand his thoughts on building wealth, happiness, good judgement, and life philosophy.
Easily the most comprehensive, and detailed view of Naval’s thoughts. And all offered for free! Amazing resource.
I like to think that if I lost all my money and you dropped me on a random street in any English-speaking country, within five or ten years I’d be wealthy again because it’s just a skillset I’ve developed that anyone can develop.
Understand How to Create Wealth
You want to be wealthy. Not rich.
What’s the difference I hear you ask?
Money is how we transfer wealth. It’s credits and debits for other people’s time. If you do something valuable, they give you an IOU that effectively says “we owe you something in the future for your previous work”.
Wealth is assets earning you money. Investments, factories, robots, software and computer programs that all earn you money while you sleep.
Basically, businesses and assets that earn you money, irrespective of how much time you put in.
Figure out what you can provide for society that it does not yet know how to get but it will want and providing it is natural to you, within your skill set, and within your capabilities.
And learn to scale it. Building one is not enough.
Find and Build Specific Knowledge
What is specific knowledge? Something you don’t consider a skill, but something people around you notice.
- Sales skills.
- Musical talents, with the ability to pick up any instrument.
- An obsessive personality: you dive into things and remember them quickly.
- Love for science fiction: you were into reading sci-fi, which means you absorb a lot of knowledge very quickly.
- Playing a lot of games, you understand game theory pretty well.
- Gossiping, digging into your friend network. That might make you into a very interesting journalist.
No one can compete with you on being you.
Play the Long Game
Compound interest is the eighth wonder of the world.
And it’s not just capital. Business relationships compound, trust compounds, reputation compounds.
And when you find the right thing to do or the right people to work with, invest deeply. Sticking with these is going to drive returns.
To get rich, you need leverage.
To get leverage, you need labour and capital.
To get labour and capital, somebody has to follow you and somebody has
to give you money, assets to manage, or machines.
To get people to follow you and give you capital, you need credibility.
Without accountability, you don’t have incentives.
Without accountability, you can’t build credibility.
And the risks of failure aren’t even that bad! Generally, people forgive failures as long as you act honestly and made a high-integrity effort.
Build or Buy Equity
You won’t get rich renting out your time. Become an owner and earn passive income.
If you don’t own anything then your inputs = outputs. You trade time for money. Meaning, when you sleep, holiday or retire, that money stops. If you own something then no matter what you do, that capital is working for you and making you money.
Three broad classes of leverage: Labour, Capital, and products that have no marginal cost of replication (Code, Media, etc).
Labour: Other people working for you. Oldest, yet arguably the worst form of leverage. Managing people is hard and messy.
Capital: Money. You can multiply your decisions with money. Scales very well. Managing more capital is much easier than managing more labour.
No marginal cost of replication: Code, books, media. Code is the most powerful. You just need a computer and don’t need others’ permission. Best part about this leverage? You can multiply your efforts without needing labour or capital. It just depends on you.
Best part of this leverage? Permissionless. For labour leverage, you need others to follow you. For capital leverage, you need others’ money to invest or make a product.
We’re living in the age of leverage. Use it!
Avoid is the risk of ruin. Avoid catastrophic loss. Avoid jail. Avoid physically dangerous things and look after your health.
Don’t lose all your capital in one go. Take rational, optimistic bets with big upsides. Take advantage of the tails.
Get Paid for Your Judgment
You want code, capital or labour to do the work. And you get paid for your judgement.
Small differences in judgment and capability really get amplified.
Coming back to accountability, look at Warren Buffett. His judgement is not only extraordinary, but his consistency, credibility and accountability make him second to none. People throw money at him to manage because they trust his judgement and credibility. They trust his judgement.
Leverage magnifies the differences in judgement.
Prioritize and Focus
Because of the internet, opportunities are abundant. But be ruthless in which ones you choose. Too many opportunities, too little time.
So set a high hourly rate for yourself and stick to it. Factor time into your decisions. If something is going to take an hour to do, it better be worth more than your hourly rate.
Basically, if you can outsource something and pay someone to do it for less than your hourly rate, outsource it. Or don’t do it at all. If you can hire someone for less than your hourly rate, hire them.
Most important things for younger people starting out?
Three key decisions to make early in your life:
- Where you want to live
- Who you want to be with
- What you want to do
These three decisions will most likely determine the trajectory of your life.
Do you want to leave your friends behind? Or be the one left behind?
Say no to things so you can free up your time to solve important problems. Spend more time one these three big decisions.
How to surround yourself with successful people?
Find what you’re good at, and help people. You attract what you project. But be consistent. Karma rewards consistency.
Finding work that feels like play
Be authentic. Find the thing you can do better than anybody. And because you love it, no one can compete with you.
Others may see you working, but to you, it feels like play. If you’re playing 16 hours a day because it feels like fun, who can compete with that?
Freedom > Everything
Freedom to do what you want.
Freedom from things you don’t want to do.
Freedom from emotions or disruptions.
Freedom is #1.
Get rich without getting lucky?
- Blind Luck: Fate or fortune. Something out of your control happened.
- Persistent Luck: Hard work and hustle. Luck by creating opportunities.
- Spotting Luck: You’re skilled in a field, so you notice when a lucky break happens. You’re sensitive to luck.
- Attracting luck: You have a unique character, mindest or brand, and luck manages to find you. The weirdest and hardest kind.
For example, let’s say you’re the best person in the world at deep-sea diving. You’re known to take on deep-sea dives nobody else will even dare to attempt. By sheer luck, somebody finds a sunken treasure ship off the coast they can’t get to. Well, their luck just became your luck, because they’re going to come to you to get to the treasure, and you’re going to get paid for it.
It shows how one person had blind luck finding the treasure. Them coming to you to extract it and give you half is not blind luck. You created your own luck. You put yourself in a position to capitalize on luck or to attract luck when nobody else created the opportunity for themselves. To get rich without getting lucky, we want to be deterministic. We don’t want to leave it to chance.
Good things take time. This is why it’s so important to enjoy it. Because you have to do it for a long time for it to pay off.
But don’t keep track of time and how fast it’s moving along, you’ll quickly run out of patience.
Final Thoughts on Building Wealth?
Making money will only solve your money problems. It won’t make you happy or healthy. But it will solve a lot of external problems!
Judgement is underrated.
But what is it? Knowing the long-term consequences of your actions.
The direction you’re heading in matters more than how fast you move, especially with leverage
How to Think Clearly
Understand the basics at a fundamental level. If you can’t explain it to a child, you don’t know it.
Essentially just compact ways to recall your own knowledge. But mental models are critical for understanding how things work and simplifying complex topics.
All I want to know is where I’m going to die, so I’ll never go there.Charlie Munger
Invert questions. Instead of “How do I become the world’s best writer?”, I often ask myself “How do avoid being the world’s worst writer?“.
Instead of figuring out what works, figure out what doesn’t work.
If you can’t decide, say no
Now more than ever, we have access to so many options. More options than you could ever imagine.
So if you’re stuck with a question like “should I buy this house?” or “should I marry this person?”, if the answer isn’t clear, say no.
There are just so many options. So don’t shot yourself in the foot by locking yourself in for a long time by not being certain.
Learn to love it. Read because you enjoy it. Read anything and everything. We’re living in the best time ever of access to books and information. So take advantage of it.
Eventually, you will read enough things (and your interests will lead you there) that it will dramatically improve your life.
How Naval reads? He skims. He speed reads. He jumps around books. He rereads as mich as he reads. He reads around 1-2 hours per day.
If a book doesn’t grab Naval’s attention within the first chapter, he’ll either drop the book or skip ahead a few chapters.
There are so many good books out there, so don’t feel bad about quitting a bad book to try a new one.
But read the classics first. Darwin, Adam Smith, Hayek. Get a good foundation.
Happiness is different for everyone. What happiness means to me, could be totally different from you.
not suffering, not desiring, not thinking too much about the future or the past, really embracing the present moment and the reality of what is, and the way it is.What happiness for Naval is
And there’s no benefits to being a grouch!
Any moment where you’re not having a great time, when you’re not really happy, you’re not doing anyone any favors. It’s not like your unhappiness makes them better off somehow. All you’re doing is wasting this incredibly small and precious time you have on this Earth.
In every situation, you have three choices: change it, accept it, or leave it.
Choosing to change something will cause suffering until you actually change it. So choose carefully and choose one at a time.
Why only one? Because any more and you’ll get distracted.
What is not a good option is to sit around wishing you would change it but not changing it, wishing you could leave it but not leaving it and not accepting it. That struggle or aversion is responsible for most of our misery.
Your life is a firefly blink in a night. You’re here for such a brief period of time. If you fully acknowledge the futility of what you’re doing, then I think it can bring great happiness and peace because you realize this is a game. But it’s a fun game.
The most important skill for getting rich is becoming a perpetual learner. You have to know how to learn anything you want to learn.
The less you want something, the less you’re thinking about it, the less you’re obsessing over it, the more you’re going to do it in a natural way. The more you’re going to do it for yourself. You’re going to do it in a way you’re good at, and you’re going to stick with it. The people around you will see the quality of your work is higher.
I haven’t made money in my life in one giant payout. It has always been a whole bunch of small things piling up. It’s more about consistently creating wealth by creating businesses, creating opportunities, and creating investments. It hasn’t been a giant one-off thing.
Literally, being anti-wealth will prevent you from becoming wealthy, because you will not have the right mindset for it, you won’t have the right spirit, and you won’t be dealing with people on the right level. Be optimistic, be positive. It’s important. Optimists actually do better in the long run.
Your real résumé is just a catalog of all your suffering.
For fans of Naval, this is the gold standard. For people who haven’t heard of Naval before, I think it gives some really interesting thoughts and ideas on important topics.
Whether you’re a super fan or totally new to Naval, I think there’s plenty to takeway from this book.
And you can read this online or on an ereader for free!? Amazing.
Interested? Read online or buy the physical book from Amazon.
Disclaimer: I’ve used Amazon Affiliate Links here. Feel free to help out by using them, much appreciated!