The Philosophy of Money: What It Means to Be Truly Wealthy
by Alexander Green, Investment Director
Monday, June 15, 2009: Issue #1018
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, I hadn’t learned about the true philosophy of money.
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…
Studying The Millionaires Next Door
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:
- They live well below their means.
- They allocate their time, energy, and money efficiently, in ways conducive to building wealth.
- They believe that financial independence is more important than displaying high social status.
- Their parents did not provide economic outpatient care.
- Their adult children are economically self-sufficient.
- They are proficient in targeting market opportunities.
- 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…
The Philosophy of Money: Wealth In Its Truest Sense
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.
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.
The Secret of Shelter Island
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 Investment U readers will profit it – and not just in a monetary sense.
“The Secret of Shelter Island: Money and What Matters” is now available at bookstores nationwide. However, Amazon is currently offering the book at a deep discount to its cover price.
And please be sure to share this with your kids and grandkids. You really don’t want them to learn these lessons the hard way.
And you shouldn’t have to either.
Good investing,
Alex Green
Any investment contains risk. Please see our disclaimer.
4 Responses to “The Philosophy of Money: What It Means to Be Truly Wealthy”
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Alexander Green is the Chief Investment Strategist of Investment U. A Wall Street veteran, he has more than 20 years of experience as a research analyst, investment advisor, financial writer and portfolio manager.
Bravo, Mr. Alex Green’s concept of how to be truly
Rich is 100% accurate, My only wish is that our Education system would teach our children the basics of Finances as a mandatory course. I for one will not only buy and read Mr. Green’s book but will make sure that many of my friends and associates also invest in their future by getting his book as well.
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This notice from Alex Green about his latest book is not at all surprising to me. I am a new subscriber (2 months) and have found the most pleasure in Alex’s “Spiritual Wealth” offerings. Those thoughts are obviously the outgrowth of his research and thoughts on this book. I believe myself to be an uncommon small investor who prizes these “spiritual” rewards far beyond the financial rewards of investing, which constantly poses a conflict with investment decision-making. I believe Alex to be a “real world/real people” sort of person who is a refreshing contrast with the ascerbic venom/slash and burn ethics and commentary from one of your sister-publication research groups to which I am (regretably) oversubscribed.
Alex’s new book may help resolve my conflicts. He is considered to be a like-minded individual whom I could gladly accept as a friend. His work is an uncommon contrarian viewpoint in your industry, and most enjoyable to read.
MH
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Alex,
I suggest reading one other source: Sir Francis Bacon’s compilation of short essays that cover nearly all aspects of human life, written about 400 years ago. Included these essays are items that specifically address how to become wealthy, as well as other items you frequently address in your Spiritual Wealth series. According to Bacon, the key to becoming wealthy is saving a significant portion of your income.
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Do not run behind success as your hardwork will make success run behind you.
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