Cowards Never Become Millionaires

If you’re already one of my multi-millionaire clients, then chances are you’ve already mastered the major lessons of this article. Truth be told, most of what I’ve learned as a 14 year veteran financial advisor, I learned from my working relationships with clients’ financial statements and from witnessing the decisions they made and their basis for making those decisions.   Sad to say, these critical financial lessons were not learned from my MBA experience, my B.S., or my securities credentials.  Experience, (the process of winning, losing, and breaking even) turns out yet again to be life’s most powerful teacher.

If you confuse assets with liabilities, then you have a steep hill to climb.  Learn the difference, so you know when you’re being sold a bill of goods.  If you’re not willing to invest the time and money to learn this distinction, then give up now and be content with your life as it is.  After all, money is not everything.  Here’s a simple example of being sold a bill of goods.  Let’s use the house where you live with your family.  You know, the “American Dream.”  If that dream house of yours has a mortgage balance, then it is not an asset.  It is not an investment.  It may be a great place to live and a wonderful place to raise your loving family and entertain your guests, but financially it is a liability.  Yet hardly a day goes by when I don’t hear someone refer to our homes as our biggest asset.  Stop believing the banker or broker who’s telling you that your house is an asset.  It’s her asset maybe, but not yours.  Do the math.

On the other hand, if you are a landlord and your tenants are paying rent that more than covers the mortgage and the associated expenses, then that may indeed be an investment and even an asset.

Get competent and increase your financial intelligence.  That is step one.  Your local libraries and online bookstores are filled with material on the subject.  The Rich Dad Poor Dad series, among others, has good content.

Millionaire Habit #2:  Buy the Bear, Sell the Bull

I’m sure you’ve heard it said or read it someplace a hundred times, “You make your money when you buy.”

Here’s how Warren Buffett says it: “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

Guess what?  The recession and its accompanying bear market, which we’re experiencing now, look like deadly mine-fields and booby-traps to the fearful and uninformed.  However, to the unafraid and prepared investor these scary, uncertain times represent the equivalent of D-Day as they see right through the disguise of fear to the underlying abandoned opportunities.

Equities, real estate, bonds, and closely-held businesses represent just a few investment categories replete with discounted buying opportunities.  Opportunity, like beauty, is always in the eye of the beholder and is almost always short-lived.  When confidence returns to the marketplace and bad news is replaced with good news, the assets that appeared to be booby-traps will be in the hands of the few who understood how to recognize them and who took bold, decisive action while everyone else was worried stiff.

Take Warren Buffett, his very own Berkshire Hathaway has fallen in price from roughly $132,000 per share to about $92,000 per share over the last 12-months as of this article.  That’s a 30% decline in value.  Yet rather than run away from equities screaming the sky is falling, he’s made some very large purchases recently, such as GE and Goldman Sachs.

Similar discounts can be found in residential and commercial real estate, in corporate debt, in commodities, as well as several other asset classes.  Be honest and ask yourself this question – Do you believe that a recession and bear market will continue to be the case five years hence?  Or alternatively, do you believe that you will look back at a Dow 7,000 five years from now and ask yourself “What the heck was I thinking?”

Procrastination, indecision, and blaming others are the ever-present habits of the unsuccessful investor.  If your goal is to master mediocrity, then master the three aforementioned habits, and mediocre results will be a breeze. On the other hand, I do not know a single successful investor or business person who has not failed and failed often (and in many cases)… failed big. The successful subscribe to the Law of Failure, whose credo goes Nothing fails but a try! And try they do….over and over again.  With each unsuccessful endeavor, the likelihood and probability of success increases substantially.  Think of failure as the currency that you need to underwrite your success. In order to score, you’ve go to get in the game.  Be focused on winning, but be willing to lose in order to keep playing.

Millionaire Habit #4:  Pay for Advice and Coaching

As far as I’m concerned Mohammed Ali was The Greatest boxer of all times.  He was a natural, superbly gifted fighter.  Yet, never once did he climb into the ring without his trainers.  So, why would you? Hedge your bets.  Get good advice.  Pay for it.  Practice making decisions.  Some will be good decisions.  Some will be bad decisions.  But, practice makes perfect.

If you’re very serious about becoming financially independent and growing or protecting your net worth, give us a call or visit and find out why our clients choose to work with us.