by winston » Tue Jun 16, 2009 8:19 am
What It Means to Be Truly Rich by Alexander Green
Highlights in this issue:
The real secret to great fortune.
Seven ways to build long-term wealth.
What is the "Secret of Shelter Island"
As a young man in my twenties, I worked as a stockbroker in a local firm. Before long I was earning a six-figure income. Then came the brand-spanking-new lakefront house, the ski boat, the Jaguar XJ-6, and all the other toys.
I saved virtually nothing. When my friends came over for parties - which were frequent - most of them assumed I was rich.
I was nothing of the sort.
Wealth is not the same thing as income. If you earn a lot of money and blow it every year, you're not rich. You're just living high.
Wealth is what you accumulate, not what you earn. And it certainly can't be measured by what you spend.
How does the average person get rich? Not by founding a software company or playing third base for the Yankees, I can assure you.
The Truth About How to Be Really Rich
Thomas Stanley and William Danko spent years studying the lives of "everyday millionaires." (One in every eight households in America has a net worth of more than one million dollars.)
They published their findings over a decade ago in their bestseller The Millionaire Next Door:
Affluent people typically follow a lifestyle conducive to accumulating money. In the course of our investigations, we discovered seven common denominators among those who build wealth successfully:
1) They live well below their means.
2) They allocate their time, energy, and money efficiently, in ways conducive to building wealth.
3) They believe that financial independence is more important than displaying high social status.
4) Their parents did not provide economic outpatient care.
5) Their adult children are economically self-sufficient.
6) They are proficient in targeting market opportunities.
7) They chose the right occupation.
In short, Stanley and Danko discovered that your net worth is mostly a result of the choices you make.
But isn't that true of most things?
Where you find yourself today is partly a matter of circumstances. But it is also about the way you play the hand you were dealt. And the game is not over...
The problem is that we learn looking backwards. Yet life can only be lived going forward.
For too many of us, it is only through time - and trial and error - that we discover what money is really about. What it can do for us. What it is costing us.
And learning the hard way can be awfully expensive...
Lately, I've been thinking a lot about the philosophy of money and what it means to become wealthy in the truest sense of the word.
Wealth Isn't Just a Number
In fact, I've just written a book about it. Out this week, it's called "The Secret of Shelter Island: Money and What Matters."
I've included the wit and wisdom of great money masters like Warren Buffett, John Templeton and J. Paul Getty. But I've also drawn on great thinkers from Cicero and Aristotle to Epictetus and Marcus Aurelius.
What can the ancient Greeks and Romans tell us about wealth today? Plenty. As Seneca said more than two thousand years ago, "Money has yet to make anyone rich."
True wealth is not just about the size of your bank balance. Yes, it is partly about financial freedom. But it is also a particular approach to life, a certain attitude.
To capture that, I've divided "The Secret of Shelter Island" into four basic sections. In "A Rich Mind", I describe the mindset that is common to virtually all wealth creators. And I show how it is still possible to become wealthy, even in the teeth of The Great Recession.
In the second section "What Matters Most," I describe principles that every investor should know and use. And I demonstrate how to calculate "your real net worth." (You won't need a calculator or financial statement.)
In the third section "Attitudes and Gratitude," I share some of the most powerful insights I've received in more than 25 years as a money manager and financial analyst. Many of them have more to do with your state of mind than the state of your investment portfolio.
And you should certainly know how one affects the other.
In the final section "The Search for Meaning," I take a hard look at the many things money can do for you, as well as the things it can't. Before anyone devotes years of his life pursuing a particular goal - financial or not - he should know and understand these things.
This book is easily the best work I've ever done, the most important thing I've ever written. I believe that most readers will profit it - and not just in a monetary sense.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"