The Investment U E-Letter
Thursday, March 20, 2003

The Millionaire Mind
An Investment U E-Letter Classic
By Dr. Steve Sjuggerud
President, Investment U

Dear Investment U Reader,

As you read this I’ll probably be in the delivery room. You see my wife is scheduled to be induced today to deliver our second baby.

So today, I’ve decided to select an Investment U “classic.” It’s a good opportunity to expose you to a number of valuable messages — including how America’s millionaire minds really think, a first hand experience with real poverty, and a Personal Protection Checklist for investing in Central American real estate.

I hope you enjoy it. It is longer than usual, but I think it will be worth it. And I hope that the next time I report to you, I can report on the birth of a healthy new baby

Good investing,

Steve

* * * * *

The Millionaire Mind (originally published 01/28/2002)
By Dr. Steve Sjuggerud

I hustled home from Costa Rica early last week.

I’d wanted to check out the real estate and other investment opportunities first hand, but there were too many fires to put out back in the States. And trying to do so from a sailboat off the Pacific coast of Central America was not exactly optimal.

And I share some of my thoughts on Costa Rica and Central America below, in my commentary titled, Unreachable. But before I recount my Costa Rican experience with you, I wanted to briefly expose you to The Millionaire Mind - how millionaires in America really think - so you can size yourself up in relation to America’s most financially successful.

I’m sure you know The Millionaire Next Door, the best-selling book by Thomas J. Stanley that describes what millionaires in America really live like. The Millionaire Mind is Stanley’s much larger follow up. I picked it up and read it on my flight home. After interviewing more than 1,300 millionaires, the author boiled down eight elements of economic success:

The Eight Important Elements Of Economic Success

Take a moment and consider your own opinions on each of the following points and how you size up to the millionaire’s perspective. And think about whether or not you need to start making some changes in your life

1. Understand that there are key success factors that our economy rewards; they include: being honest with all people, hard work, integrity, and focus. [I was amazed to learn that the top of the list was "being honest with all people" - even above hard work!]

2. Never allow a lackluster academic record to stand in the way of becoming economically productive. [Can you believe that the average millionaire graduated college with a 2.9 GPA - and that's if he even graduated!]

3. Have the courage to take some financial risk. And learn how to overcome defeat. [Handling defeat is a big key in investing - the most important - and toughest - thing to do is to Cut Your Losers.]

4. Select a job that is not only unique and profitable; pick one you love.

5. Be careful in selecting a spouse. [Economically productive people marry men or women who share the characteristics that are most compatible with success.]

6. Operate an economically productive household. [Many millionaires prefer to repair or refinish rather than buy new.]

7. Follow the lead of millionaires when selecting a home - study, search, and negotiate aggressively.

8. Adopt a balanced lifestyle. Many millionaires are “cheap dates.” It does not take a lot of money to enjoy the company of your family and friends.

Contrary to the popular wisdom about the “rich,” I was pleased to find that millionaires in America generally are honest people. They value their marriages. And they value the company of their family and friends over expensive “stuff.” What a refreshing revelation - that these are the core values of those who have achieved true wealth.

If you’re interested in learning more about how America’s most financially successful people think, make sure check out the book The Millionaire Mind by Thomas Stanley.

Now, let me move on to Costa Rica. I wrote an email, Unreachable, last week that was originally only available to paid subscribers to my newsletter, Steve Sjuggerud’s True Wealth, and Pirateinvestor.com. Since it was so well-received, I’d like to share it with you here

(Incidentally, for more information on how you can subscribe to True Wealth, see the link at the bottom of today’s message.)

Unreachable - Where You Want To Be
By Dr. Steve Sjuggerud

“Being unreachable is a potent status symbol in the world today. Every dateless pimple nose with a dot.com has a Lexus, a business jet, a weekend house in Phuket, and a cell phone. But you just try reaching the Queen of England on the blower. Or try finding the direct-dial number for the president of the United States - unless you’re a rich campaign fund-raiser or a fat girl in saucy underwear As far-too-accessible Bill Clinton has proven, out of touch is the thing to be.” - P.J. O’Rourke

Generally, it’s rare that the Queen of England and I have much in common. But right now, she may be more reachable than me.

I’m on a 440-foot sailboat somewhere in the Pacific.

We left last night from Puntarenas, Costa Rica. We’re sailing all day today, and we’ll arrive at Coiba Island, Panama tomorrow morning. We have basically nothing for communications. And quite frankly, I don’t like it.

I don’t drink alcohol. I don’t smoke. And I’ve never done drugs. But I do have one addiction, apparently - and that’s information. I’m an “info-holic“.

I’m connected. Broadband, Palm Pilot, cell phone, wireless laptop, TV, telephone, Financial Times, Wall Street Journal, man, every day, I’ve Gotta Know. What do I do with all this information? Less than I’d like - but a heck of a lot more than I can do right now.

For me this boat is like an intervention. I’m on the good ship Betty Ford.

The Real Lesson Of Travel In Emerging Markets

On my first trip to Costa Rica I learned the greatest life lesson of all. It’s about the accident of birth

I was in high school at the time, and it was my first trip to a third-world country. (To give you an idea about my worldly experiences at the time, this trip to Costa Rica was also my first trip without my parents).

It was the first time I saw real poverty. Real “living - outside - running - around - naked - no - running - water - no - electricity” poverty.

Up until then, I thought I’d lived my life as a thankful person. But I immediately realized how lucky I was to have been born a White American Male (WAM). (Insert chest thumping here.) Right out of the gate, I had a roof over my head, clothes, safe water and electricity.

When I came back to school, everything that had previously seemed important now seemed so petty. Who cares what label your jeans are - be thankful you’ve got them. Who cares if you’re tall or short, rich or poor, fat or skinny man, you’re all lucky. You’re safe. You’re alive and well, and chances are good you’re going to eat tonight. The cable TV, the car, the movies to go to - they’re all just icing on the cake.

I’ve now taken three trips to Costa Rica (the most recent before this one was in 1990). I would go to Costa Rica to “get humbled” again and again. To be reminded of what’s important.

I have been to Puntarenas, literally and figuratively the armpit of Costa Rica, on each of my previous trips. I have a friend there, “Yanko” (short for Juan Carlos) Aponte. He represents what’s great about Costa Rica. He’s a Tico (which means local Costa Rican entrepreneur). He’s a lawyer, a real estate broker, a tour guide, etc. He’s whatever you want him to be - if there’s a way for him to make money on the deal.

My last trip there in 1990, I briefly visited him one morning. His family asked me to stay for breakfast. Yanko is the oldest of a dozen kids. He has a wife and a gaggle of kids himself, too. He supports all his brothers and sisters, his mother, and his own family. And they all live under the same small roof.

I ate breakfast by myself at the table, but I could feel about 25 sets of eyeballs watching my every bite. These kids had probably never seen a WAM in their house before. I must have been a real sight sipping my coffee. You see I don’t drink coffee. But my Spanish wasn’t very good, and I didn’t want to offend them or be misinterpreted. They might have thought I didn’t want to drink their coffee. So I drank it. Cautiously.

This great hospitality was probably born of curiosity. “Does he look like the WAMs we’ve seen on Baywatch?” But that kind of curiosity may be gone now as WAMs are all over Costa Rica.

Nothing Is Like You Expect It To Be

Costa Rica has changed dramatically in the last 12 years. The airport used to be your typical third-world dump. Now, the international terminal rivals Malaysia’s in its Buck Rogers appeal (or audaciousness). Back then there was no place decent to stay. Now there’s a Marriott right outside the airport and dozens of nice hotels scattered around the country. I used to think that uppity Americans wouldn’t like Costa Rica. But the airport and the Marriott are now up to the highest snob standards. I guess that’s progress.

Progress creates its own problems, of course. Crime against tourists has been on the rise for years. The “have-nots” see easy targets in the “haves” - who are mostly WAMs.

I’ve had my share of adventures in Central America, and if there’s one piece of advice I would give it’s this: nothing is like you expect it to be.

And that went for Santa Catalina as well It’s a full-day trip from Panama City to Santa Catalina by bus. And we arrived in the pouring rain. We were told we would be greeted, but nobody was there. Typical. Finally a bunch of kids appeared, grabbed our bags, and ran into the river with the bags over their heads. Then they ran through a cow pasture, and up to a house, which, fortunately, is where we were headed. Ricardo Icaza’s house is a three-story wonder on a bluff surrounded on three sides by the ocean. An amazing house

An amazing house that does not have running water or electricity. But it was no problem. You got used to it quickly, just like eating dinner and playing guitar by lamplight and candlelight at night. Just like watching Ricardo and his Brazilian wife grill or cook our food on a gas stove. Just like pouring a five-gallon bucket of water into the toilet to flush it. Just like taking a shower fed by captured rainwater. And just like drinking bottled water, and brushing your teeth with it as well. It was a nice way to live - no big thing.

Heading back home, after the all-day trip from Santa Catalina to Panama City, we arrived at the airport. More surprises.

There must have been 800 Americans there, all booked on the same Sunday flight. All falling for the same scam “You didn’t reconfirm your flight within 72 hours ” So, you had 500 more Americans than the plane could hold, all sweating, all livid.

For us, the people who had just had an extended stay at a place with no running water or electricity in Santa Catalina, the fact that there was no phone goes without saying. So, of course there had been no call to reconfirm. We were stuck in Panama for a few more days.

So, after all that 12 years ago, was there an investment lesson that I could share today? I don’t know probably not. But there was a bigger “life” lesson that I now appreciate:

Life is better than you realize. But more uncertain than you know. All at the same time.

For investment lessons, we need to jump ahead 12 years, and focus back on the cruise.

Opportunities Today In Central American Real Estate

For those of you - like me - who are interested in Central American real estate for investment purposes, my gut instinct would have been to tell you that Costa Rica has already had its big boom. Coastal real estate prices have been driven through the roof, and Nicaragua, which is at least four times cheaper and 10 times less developed, is probably the better buy. (Not to mention that I own property there) Plus, International Living’s Kathleen Peddicord gave a good speech onboard showing why Panama offers investment opportunity as well.

And all of this is probably true.

But it’s also true that there’s still plenty of oceanfront property left in Costa Rica, and the country may just be hitting that “tipping point” where an average older American can handle the travel and accommodations. The floodgates could just be opening. What’s more, as we sailed along today, to the shore of southern Costa Rica, we seemed to go for miles and miles never seeing anything touched by human hand. Just miles and miles of nature. Somebody will buy and develop it someday. And it should be cheap, as somebody would have to make a major investment into infrastructure just to get the ball rolling. You’d be starting from absolutely nothing.

Personal Protection Checklist for Investing in Central American Real Estate

If you are starting to consider buying property in Central America, you need to be aware that there are often serious problems with free and clear title to land. We take it for granted here in the States. But you definitely don’t want to spend $100,000 on a property, only to have a local prove that the guy who disappeared with your money didn’t legally own the property.

Yesterday, I met a woman named Turalu Murdock, who was the most knowledgeable person in this area that I’ve ever met. She specializes in title insurance in Central America and the Caribbean. But she actually lives in the States, which is nice - she speaks our language and knows what we’re looking for. She offered up the following checklist for buying real estate in Central America. It’s the best I’ve ever seen. I highly recommend you file it away for when your curiosity gets the better of you, and you head down here:

Personal Protection Checklist

1. Am I dealing with the actual owner of the land? How do I know?
2. Are there people living on the land? What rights do they have?
3. What are the boundaries of the land? How do you know?
4. Do you have a registered title or merely a possessory title?
5. Is there a confiscation, “cooperativa” or “ejido” in the chain of title?
6. Does this land have restrictions on ownership?
7. What is the access? Public or easement?
8. How did the seller obtain title?
9. What rights do others have to the land?
10. Do I need a local attorney?
11. Can the government take my property?
12. Do you mind if I get title insurance?

You can reach her at: tmurdock@firstam.com or 877.641.6767. If someone’s giving you a great bargain on a piece of property, run it through this checklist before you do anything. Because if it seems too good to be true, it probably is.

Today’s IU Crib Sheet

• Self-evaluation is always a useful exercise for investors. Take a few moments to analyze The Eight Important Elements of Economic Success as outlined by Thomas Stanley in The Millionaire Mind. See if you currently incorporate these elements - which are the collective traits of the financially successful - into your life.
• While Costa Rica may have seen its best days of real estate prosperity, there are still miles and miles of oceanfront property that will someday be developed. For the right investor - in the right situation - this could be a very attractive investment.
• Before investing in any Central American real estate deal, remember that problems may exist that we do not typically concern ourselves with in the United States. Before investing a dime, be absolutely sure you can answer all 12 questions in the Personal Protection Checklist - compiled by Turalu Murdock - listed above.

Good investing,

Steve

Back to Archive