Wealthy and Wise:

Do you have the mind of a millionaire?

It's not the money, it's the mind, writes Thane Stenner

By Thane Stenner
Thane Stenner is Managing Director, Private Client, founder of Stenner Investment Partners of GMP Private Client L.P., and author of True Wealth: An Expert Guide for High-Net-Worth Individuals (and Their Advisors). www.stennerinvestmentpartners.com

Globe Investor Magazine Online, January 13, 2009

Here is a lesson I have learned from wealthy Canadians over the past 20 years: The wealthy think differently: about money; about investing; about life.

A lot of people assume being rich means using money differently. They want to know the business strategies, the investment tactics, the financial "secrets" of people who have amassed great wealth.

These people are looking in the wrong place. Sure, affluent individuals use advanced strategies to manage their wealth. But that's not the way they became wealthy. Before they became millionaires, they had to have "the millionaire mind"-a way of thinking that naturally leads to financial and life success.

Here are four critical components of that thinking. Hopefully, by shaping your mind after theirs, your wealth will grow like theirs.

Don't water the wine

Some weeks ago I read Geoffrey Beattie's column on the "builder's principles" that his boss Kenneth Thomson passed on to him. Now the CEO of Woodbridge Co. Ltd. (the multibillion-dollar Thomson family holding company), Beattie follows the same principles his boss did.

"Don't water the wine," was rule one. In other words, insist on quality. It's remarkably simple advice that I've heard echoed by many of the wealthy individuals I know.

If your goal is to build wealth, invest in excellent businesses with excellent long-term prospects. Don't allow mediocre investments to diminish the compounding power of those excellent businesses. Don't allow hot tips or investment fads to distract your attention from those excellent businesses. Certainly, diversify to protect your wealth-but don't diversify aimlessly. Rather, diversify by investing in other excellent businesses. Insist on this standard, and you have a good chance of becoming wealthy one day.

The value of time

I had a conversation with one of my clients a few weeks ago; he told me he was closing a deal to buy a private jet. I asked him how he came to make his decision.

"I value my time," was his straightforward response. He explained how he calculated his hourly earnings based on the expected long-term return on his investment portfolio, divided by a 40-hour work week (the figure came out to about $20,000 an hour). If a private jet could save him a few hours on every trip he made for business or pleasure over the year, it would more than pay for itself.

Most of the wealthy individuals I've met share this perspective. They're willing to invest in technologies, services, systems, and expert advisers that save them time, because they realize time saved is money added to their net worth. With more time on their hands, they're able to focus more fully on their work. They're better able to pursue their passions, maintain their health, and spend time with their families. Talk about a recipe for success.

Be brave

In an average week, I speak to perhaps a dozen clients, either in person or on the phone. That number has tripled since last summer. My clients are deeply interested in the current financial turmoil. But not for the reasons you might think.

My clients aren't looking for information. They're looking for opportunity. They are calling me because they want to learn about the opportunities created by the current financial crisis, and how they can profit from the herd's pessimism.

Some people call this value investing. Others call it contrarianism. I call it courage. And I believe it to be an immensely important part of the millionaire mind. If you can develop the ability to be brave in the face of financial turmoil, to seize the opportunity that resides in every crisis, you're well on your way to wealth.

Wealth is a tool

Most of the millionaires I know are happy - satisfied with their accomplishments and at peace with themselves. Why? Because while they all care about their wealth, they understand money is not an end unto itself, but rather a tool for accomplishing life goals.

I've seen it over and over in my practice. The most successful people I know give generously to causes they care about. They take a genuine interest in the lives of their children and grandchildren. They are proud residents of their communities, and are willing to support those communities with both money and time.

These people have given their wealth a purpose. They know why they became wealthy, and why they want to stay wealthy. They are willing to spend money in the pursuit of their life goals-whether that goal be a sound and growing business, a charitable foundation, or simply a happy and financially secure family.

Special to the Globe and Mail