I. Summary#
“Property of Money” is Korean entrepreneur Kim Seung-ho’s insightful account of his path to financial success. Starting from humble beginnings, he climbed the economic ladder, gaining profound insights into the multifaceted nature of money. Driven by a desire to share his valuable experiences, the book explores five key attributes of money and outlines four essential skills necessary for achieving wealth. Through compelling stories and real-life examples, Kim Seung-ho demystifies complex economic concepts and investment principles, offering readers a practical guide towards financial freedom.
II. Chapter Summary#
Part 1: The Essence of Money#
Money is Personified: Kim personifies money, suggesting it possesses emotions and will. Your attitude towards money influences how it behaves towards you. Respect and treat it like a friend to earn its favor.
Investing in Superior Entrepreneurs: Investing in companies and entrepreneurs more competent than oneself is a wise move, akin to partnering with them and reaping the rewards of their success. The author shares how he invested in successful companies like Microsoft, Amazon, and Nike, effectively becoming their “partner.”
The Secret of Compound Interest: Compound interest is a fundamental principle in investment, capable of multiplying wealth. However, one must also be wary of its power when applied to debt. The author uses Warren Buffett’s “Mona Lisa” analogy to illustrate the impact of compound interest.
The Strength of Fixed Income: Stable cash flow surpasses inconsistent income, attracting and accumulating wealth. Kim compares fixed income to a well-trained army, capable of efficiently managing a large-scale organization despite smaller numbers.
Money’s Gravitational Force: Substantial wealth attracts more wealth. Starting with small accumulations, compound interest propels wealth multiplication, much like the Earth formed from the gradual attraction of minuscule particles. The author illustrates this concept with the Han River and the Amazon River, demonstrating how small streams can converge to form vast rivers.
Highest Risk, Lowest Risk: The stock market is riskiest when everyone is bullish and chasing the latest hot stock; conversely, it’s least risky when fear grips the market and everyone is selling. Maintain a balanced perspective on fear and greed, embracing opportunity during widespread fear and exercising caution when greed prevails. Warren Buffet’s famous quote, “Be fearful when others are greedy, and greedy when others are fearful,” encapsulates this wisdom. The author uses the example of increased airline safety a week after an accident to illustrate this point.
Treat Others’ Money as You Treat Your Own: Treating others’ money with respect safeguards your own from similar disrespect. Respect for others’ money is reciprocated. The author uses his attitude towards shopping carts at supermarkets to emphasize the importance of respecting others’ money.
Inheriting Millions with a “No Loss” Clause: Through a hypothetical scenario, Kim highlights that preserving wealth is not straightforward. It requires learning, accumulating experience, and recognizing the significance of consistent income. The protagonist in the story inherits a substantial sum with the stipulation of no loss, ultimately realizing that maintaining wealth’s value is no easy feat.
Rejecting Quick Riches: The pursuit of quick wealth often leads to speculative traps and the perils of greed, ultimately ending in failure. Building wealth demands a steady and gradual approach. The author uses the analogy of constructing a house to demonstrate the importance of gradual wealth accumulation.
Can Economists Predict the Future?: No one can accurately predict the macroeconomic future, especially in the long term, due to inherent uncertainties. Resist blindly following expert predictions; cultivate independent thinking and continuous learning. Kim quotes economist John Kenneth Galbraith: “There are two kinds of people in the world: those who don’t know and those who don’t know they don’t know.”
Buying Samsung Stock at Samsung Securities: This anecdote illustrates the need for knowledge before venturing into investments. Avoid assumptions; understand market rules and investment tools. Kim compares the stock market to a ruthless jungle, where knowledge is essential for survival.
Changing Your Destiny Through Respectful Address: A personal experience highlights the importance of respecting others and showing genuine interest in their affairs, leading to trust, goodwill, and ultimately, good fortune. The entrepreneur in the story habitually addresses everyone as “that person,” ultimately losing friends and connections.
Repeated Luck is Skill, Repeated Failure is Habit: Lucky individuals often possess greater astuteness and intelligence. They excel at observation, learning, and accumulating experience. Conversely, repeated failure calls for introspection and addressing personal shortcomings. The author uses examples like lottery tickets, rock-paper-scissors, and parking spots to illustrate the interplay of luck and skill.
Discerning Fact from Investment Hype in News: Using the COVID-19 pandemic as an example, Kim underlines the importance of focusing on facts and data, rather than blindly trusting media reports and expert predictions. He reached a more accurate assessment by comparing the total number of infections with the infection rate.
Each Dollar Experiences Time Differently: Borrowing Einstein’s theory of relativity, the author suggests that money is also subject to the influence of time. Different sources of money experience time differently; always invest with money that has ample time. Kim compares “time-rich” money to individuals who have more time to build relationships, fall in love, and raise children.
Diversification Isn’t Enough: Kim critiques the misinterpretation of the saying “Don’t put all your eggs in one basket.” Diversifying within a single market is merely using multiple baskets on the same shelf, still exposed to risk. He recommends spreading investments across diverse markets such as stocks, bonds, and real estate.
Three Paths to Wealth: The author outlines three ways to become wealthy: inheritance, winning the lottery, and business success. He encourages young people to pursue entrepreneurship or engage in long-term investment. Kim elaborates on two paths to business success: starting a business or investing in successful companies.
Why Savings Don’t Grow: The root causes of stagnant savings lie in spending future income, neglecting asset management, undervaluing small amounts of money, and lacking investment knowledge. The author advises readers to ditch credit cards, use debit cards, and appreciate the power of accumulating small amounts of money.
Part 2: The Wisdom of Investment#
Identifying Financial Illiteracy: Kim presents a list of 90+ economic and financial terms, encouraging readers to study and master this foundational knowledge, enhancing their financial literacy. He believes financial literacy is a vital survival skill for modern individuals.
Traits of Successful Stock Market Investors: These individuals perceive themselves as business owners, hold high-quality money, and excel at buying at low prices. The author emphasizes selecting quality company stocks for long-term holding, engaging with the company’s progress as if they were owners.
Defining True Wealth: Genuine wealth encompasses owning a mortgage-free home, a steady stream of passive income, and the mentality of “not needing to work.” Kim recognizes that the standard of wealth is relative, and true wealth lies in inner freedom.
Daily Habits for Wealth Protection: The author shares his routine of diligently reading news, scanning economic websites, and collecting information. He believes continuous learning and market awareness are crucial for maintaining investment sensitivity and making informed decisions.
The Harsh Realities of Poverty: Drawing from personal experience, Kim paints a grim picture of poverty, encouraging readers to believe in their potential for wealth. He underscores poverty’s power to strip dignity and even dismantle family relationships.
Three Responses to Financial Panic: The author categorizes people’s responses to financial panics: those who suffer losses, those unaffected, and those who capitalize and profit. He analyzes the characteristics of each group, noting that individuals with no debt and stable income weather the storm while those who seize opportunities emerge wealthier.
Rewinding Time for Wealth: Reflecting on his experience, Kim encourages young people to start investing early and highlights the limitations of relying solely on bank savings. He suggests young people focus on long-term investments in quality company stocks instead of traditional bank savings.
The Foundation of Wisdom: Learning fundamental knowledge is a prerequisite for gaining wisdom. The author encourages young people to study languages and mathematics, cultivating logical thinking abilities. He believes learning new languages broadens horizons while studying mathematics sharpens logical reasoning.
Immediate Action for Wealth: Drawing inspiration from Marie Kondo’s organizational methods, Kim recommends readers declutter their homes, fostering respect for possessions, and reflecting on their spending habits. He suggests that the way we treat possessions reflects our attitude towards money; respecting belongings leads to cherishing wealth.
Will the Stock Market Rise?: Don’t obsess over short-term market fluctuations. Focus on long-term investment, select quality companies, and patiently wait for value to return. He advises readers to identify quality companies that warrant long-term investment and maintain unwavering confidence.
Unlocking the Value of Rent Payments: Entrepreneurs consistently paying rent possess the capacity to purchase property. The author encourages them to become property owners and capitalize on the potential for greater returns. He emphasizes that rental income can translate into property appreciation, while property ownership offers greater security and returns.
Real Estate vs. Stock Market: Instead of fixating on which market is superior, choose an investment approach aligned with your style and risk tolerance. Kim provides a comparative analysis of real estate and stock market investments, highlighting their unique features and potential risks.
My Independence Day: Using the concept of a personal “independence day” marked by financial independence, the author emphasizes the significance of economic self-reliance. He encourages readers to develop financial strategies and strive for early financial freedom, recognizing its role as a foundation for personal liberty.
Four Skills of Money Management: Kim outlines four essential skills for managing money: earning, saving, preserving, and spending. He provides insights into the characteristics of each skill and recommends learning methods. He emphasizes that these are interconnected skills that need to be mastered for effective wealth management.
Investing with Values: The author shares his investment principles, avoiding industries that profit from misfortunes. He believes such money carries negative consequences and clashes with his values. He exemplifies this with businesses centered around firearms, cigarettes, and drugs.
Insurance is not Savings: Kim criticizes the practice of insurance companies selling high-commission, low-return products disguised as savings. He advises readers to choose insurance primarily for its protection function, not as investment vehicles, and to select suitable products based on their individual needs.
Beautiful Junk: Drawing from a luxurious travel experience, Kim conveys that experiences and memories are more valuable than material possessions. He urges readers to avoid accumulating “beautiful junk,” recognizing that many purchases become unused clutter, wasting both money and space.
Separating Economics from Political Bias: Readers are urged to approach economic news with a critical eye, avoiding interpretation solely from a political standpoint. Refer to factual data to form judgments. Kim suggests that many media reports are politically charged, encouraging independent thinking and caution against being swayed by media biases.
Part 4: The Mindset and Responsibilities of the Wealthy#
- The Underdog Advantage: Using historical and business examples, the author illustrates that underdogs overcoming giants is a recurring theme. He encourages young people to embrace challenges and strive for success. He believes individuals from humble backgrounds often possess greater drive and innovation, enabling them to seize opportunities and achieve upward mobility.
- Your Personal PER: Kim introduces the concept of Price-to-Earnings Ratio (PER) and applies it to personal careers and businesses, reminding readers to focus on the stability and sustainability of income sources. He emphasizes that high income doesn’t equate to wealth; building systems that generate consistent income is crucial.
- Wealth Is Not Predestined: Great wealth arises from a combination of opportunities, hard work, intelligence, and luck, not from predetermined destiny. The author encourages readers to actively seek opportunities and prepare themselves, believing everyone holds the potential for success, provided they believe in themselves and strive diligently.
- Start Small, Dream Big: Young aspiring entrepreneurs are advised to gain experience and build connections by initially working in small companies. He believes small companies offer more opportunities for learning and practical experience, facilitating rapid growth.
- Perseverance is Power: The author emphasizes the importance of consistency and perseverance, advising readers to devote 100 days or three months to mastering a skill or forming a good habit. He believes persistence is key to success, as any skill requires continuous effort to achieve mastery.
- Limitless Business Opportunities: Kim encourages readers to think outside the box and be receptive to business opportunities. He shares his experience of launching a flower shop, demonstrating that opportunities are present in everyday life; a keen eye can unearth suitable ventures.
- Entrepreneurship: The Path to Freedom: Entrepreneurship is championed as the only profession offering genuine control over one’s destiny. The author encourages young people to pursue entrepreneurship, breaking free from the limitations of corporate employment. He highlights that entrepreneurship offers greater freedom, a sense of accomplishment, and the potential for significant wealth creation.
- Discerning the Nature of Money: Earn money of good character, avoiding ill-gotten gains from sources like gambling or fraud. Kim believes that good money brings blessings, while bad money carries misfortune, using examples of money obtained through gambling or fraud to illustrate the harmful effects of ill-gotten gains.
- Navigating Family Responsibilities as the Wealthiest Sibling: Kim shares guidance based on his own experience, recommending different strategies for supporting and caring for family members, depending on the scale of wealth.
- Under 100 Million Won: Prioritize women in the family who have contributed significantly but are often overlooked, such as sisters-in-law, along with nieces and nephews. Buy them gifts, cover family meal expenses, and provide regular financial support to parents. Avoid lending money to siblings for business ventures or assisting parents in upgrading their homes or cars.
- Under 500 Million Won: You can purchase a house or car for your parents, cover all their living expenses, and assist nieces and nephews with education costs. At this stage, you can offer measured support to siblings.
- Over 1 Billion Won: Actively help siblings escape poverty, select suitable siblings to participate in the management of family businesses, and lead the entire family to prosperity.
- The Right to Fail: Young people are encouraged to embrace challenges without fear of failure, viewing failure as a valuable learning opportunity. He believes failure is a precious life experience, making success more appreciated when achieved.
- Can Books Create Wealth?: Reading alone cannot make one wealthy; the key is to cultivate independent thinking and draw inspiration from books. He suggests reading with a discerning mind, applying what you learn to your own experiences.
- God’s Impartiality: God’s fairness lies in his non-intervention in earthly affairs. The author encourages readers to rely on their own efforts rather than placing their hope in divine intervention. He believes each individual is responsible for their own destiny and shouldn’t place their hopes solely on divine intervention.
- The Passionate Entrepreneur and His Furious Wife: A fictional story emphasizes the vital role of family harmony in business success, condemning the practice of prioritizing investments at the expense of family well-being. The story features an entrepreneur, Mr. Song, who runs a successful dessert shop and a barbecue restaurant. He pours all the profits back into developing new menu items and his research lab, leading to financial strain at home and his wife’s understandable frustration.
- Partnerships: A Delicate Dance: Kim outlines the conditions and considerations for successful partnerships, emphasizing the importance of respecting partners’ money and drafting legally sound agreements. He believes that trust and respect are paramount in any partnership, and all aspects of the agreement should be clearly defined in writing to prevent future disputes.
- Stick to the Main Road: When investing in unfamiliar sectors, opt for companies that are industry leaders to mitigate risk. He compares investing in a leading company to navigating a well-defined road, reducing the risk of getting lost and generally offering greater security.
- The Quarter Rule: The author unveils his personal “Quarter Rule,” advocating for living expenses to be capped at one-quarter of one’s financial capacity. This strategy allows for enjoying life while maintaining a financial safety net.
- Prayers Alone Won’t Bring Riches: True wealth comes through hard work, wisdom, and seizing opportunities, not reliance on divine intervention or supernatural forces. While prayer might offer spiritual solace, it cannot replace action.
- Four Habits of Saving: Cultivate good habits early in life, starting with simple daily actions that lay a strong foundation for wealth accumulation. These habits are: stretching upon waking, making your bed, drinking a glass of water on an empty stomach each morning, and maintaining consistent sleep and wake times.
III. Notable Quotes#
“Money is personified.”
Money, like people, has emotions and a will; your attitude towards it influences its behavior towards you.
“Compound interest is the greatest invention of mankind, the eighth wonder of the world.”
The power of compounding is immense, capable of multiplying wealth. It is one of the most important principles in investing.
“Be fearful when others are greedy and greedy when others are fearful.”
Approach market sentiment rationally, seize opportunities during fear, exercise caution during greed.
“Treat others’ money as you treat your own.”
Respect for other people’s money earns respect for yours. It reflects a fundamental principle of human interaction.
“The only way to quickly become rich is to not be in a hurry to become rich.”
Avoid the pitfalls of chasing quick riches, build wealth steadily and gradually.
“Not knowing is the right answer.”
The future is full of uncertainties. No one can accurately predict it. Maintain humility and a willingness to learn.
“An illiterate person might experience inconvenience, but a financially illiterate person cannot survive.”
Financial knowledge is essential for survival. Learn and master financial literacy to effectively manage wealth and avoid scams.
“The person paying rent is the landlord.”
Entrepreneurs capable of consistently paying rent possess the capability to own property. Seize opportunities to become property owners.
“The fastest way to become rich is to slowly become rich.”
Avoid the rush to wealth. Genuine wealth comes through persistent learning and gradual accumulation.
“Working hard doesn’t guarantee wealth, acquiring wealth doesn’t guarantee you’ll be rich, and being rich doesn’t guarantee happiness.”
Wealth is not an end but a means to an end. A balanced perspective on money is crucial for true happiness.
“Failure is a right.”
Young people should embrace challenges without fear of failure, viewing failure as a valuable learning experience.
“God will not make you rich.”
Wealth comes from hard work, intelligence, and opportunity, not divine intervention or supernatural forces.
“Small change is the “sprout” of big money.”
Don’t underestimate the power of accumulating small amounts of money. Start small and gradually build your wealth system.
“Money has different characters.”
Earn money through ethical means and avoid ill-gotten gains like those from gambling or fraud.
IV. Guiding Principles#
“The Attributes of Money” provides practical guidance for finance and life, offering these key takeaways:
- Perspective on Money: Respect money, utilize it wisely, and treat it as a tool to achieve your goals, not as an end in itself.
- Financial Management: Cultivate strong financial habits, value savings, learn to invest, and protect yourself from scams.
- Investment Philosophy: Interpret market emotions rationally, pursue long-term investments, choose quality companies, and implement a well-defined asset allocation strategy.
- Life Philosophy: Embrace challenges, learn from failures, and continuously learn and grow. Strive for financial and spiritual freedom.
- Family Values: Prioritize family harmony, cherish your loved ones, and fulfill your responsibilities towards them.
- Ethics in Action: Show respect for others, be willing to help, and cultivate kindness in your interactions.