Secrets of the rich: Think like a millionaire

Have more how-to books been written about getting rich than any other topic? Well, no. There’s another deep-seated human desire that takes first prize. You could even call it a big-seated human desire—the attempt to lose weight. But second place, that’s pretty much a given. And in a report that’s all about learning the Secrets of the Rich, it felt fitting to take a long, hard look at the rich vein of literature devoted to the making, keeping and growing of lots of money.

There’s a strong empirical aspect to writing a book about getting rich, of course. When aspiring multi-millionaires buy such a book, they don’t want to spend their seed money—the $30 investment they hope will be rewarded 30 thousandfold—on mere musings. They’re looking for tips and techniques, recipes even, that have stood up to rigorous examination in the test kitchen of life. So it’s hardly a surprise that many of the best-known books employ a distinct methodology: they study millionaires.

Why study millionaires? Well, most millionaires have done some things right, and some have done most things right. Beyond that, their stories are not only interesting but incredibly different. In fact, after studying the books that study millionaires, it’s fair to say that there’s something of a Hegelian dialectic going on—you remember: theses, antithesis, synthesis. One author asserts something, the next one makes a distinctly different and even oppositional argument, and then a third comes along and posits yet another way forward, this one taking into consideration the ideas that have come before. At least that’s what we found when looking at two of the best-known books to study millionaires and a third, due to be published this September, that has its own twist on the millionaire thing, as well as a Canadian connection.

Let’s begin with a classic, a book dating back to another era of social and economic uncertainty, the late 1930s. In 1937, when Napoleon Hill published Think and Grow Rich, he hit the very pay dirt he counselled readers to unrelentingly dig for. So strong was public appetite for the book that first, second and third printings sold out within months; seven decades later BusinessWeek would name it the sixth bestselling paperback business book of all time.

Born in a one-room cabin in southwest Virginia, Hill became a lawyer and writer, and in the latter capacity met famed steel magnate, philanthropist and powerbroker Andrew Carnegie, who gave him the idea of studying successful people to determine The Law of Success (the title of his original book series), as well as an entrée into their circles. Hill interviewed some 500 people, overwhelmingly men (it being the era of Great Men and Helen Keller), and analyzed their stories to produce his Thirteen Steps to Riches, predating A.A.’s catchier 12 Steps by a few years.

In his preface Hill refers to a single secret, passed along to him by Carnegie, but allows that it is never explicitly expressed. Rather, as a college sophomore hopes to find the key to human existence hidden in a Herman Hesse novel, it “will jump from the page and stand before you, if you are ready for it!” Hill does, however, detail the 13 Steps to Riches, which begin with Desire (a transcendent focus on wanting to be rich) and end with what he calls the Sixth Sense, which he defines as a subconscious “creative imagination” that enables ideas, plans and thoughts to flash into the mind. In contemporary terms, we might think of this as akin to the endorphin-influenced state achieved during vigorous exercise.

In between the First and Thirteenth will be found both the expected and some surprises. We spoke with Bill Hartley, the publisher of and a contributor to the most recent edition of Think and Grow Rich, who allows that many of the questions he fields relate to the Tenth, The Mystery of Sex Transmutation. “Every other animal responds to the call of sex only in season,” Hill writes, one of many passages in which a distinctly puritanical point of view is revealed. At the same time, he writes approvingly of a quality termed “sex energy,” which, to oversimplify, involves redirecting all the effort and magnetism wasted on the pursuit of out-of-season sex toward more lucrative goals. Hartley chuckles a little at this, but does not refute the principle, while noting that in The Law of Success, published a decade earlier, sex of any kind was such a delicate subject that Hill could only hint at what he meant.

With its preponderance of sentences like “Many other men had tried to interest Schwab in a steel trust after the pattern of the biscuit, wire and hoop, sugar, rubber, whiskey, oil or chewing gum combinations…,” reading Think and Grow Rich is to understand how much the world has continued to evolve during the subsequent three-quarters of a century. But it is also to understand how much it has stayed the same. Hill relates the story of a man who ran into bad luck during a gold rush by giving up on a stake only to see the next owner strike the mother lode. Rather than lamenting his fate, the man used it as inspiration to become wealthy by another means. “I stopped three feet from gold,” he told himself over and over, illustrating what Hill calls The Power of Thought, “but I will never stop because men say no when I ask them to buy life insurance.”

Well, who has not endured the spiritual descendant of that life insurance agent? Indeed, a skeptic might think that Think and Grow Rich would be of primary use to overly persistent salespeople—the Jack Lemmon character in Glengarry Glen Ross, for example. But, as Bill Hartley says, “This book has stood the test of time. If you follow what Napoleon Hill says, you will become successful.” And you needn’t be in sales. Among the contemporaries he cites as having been inspired by it are Drew Carey, Ted Turner and Mitt Romney.

We’ll add another to the list, though this person has not yet achieved his goals and must remain anonymous. In our copy of the book, borrowed from a public library, we found a slip of paper on which a previous borrower had traced his own version of the commitment that Hill counsels all must make in keeping with the Third Step—Autosuggestion: The medium for influencing the subconscious mind. “By the first day of April 2014,” this person wrote in ballpoint pen, “I will have earned five million dollars, which will come to me in various amounts from time to time during the interim. In return for this I will give the most efficient service of which I am capable, rendering the fullest possible quantity and the best possible quality of legal services.

“I believe I will have this money in my possession. My faith is so strong that I can now see this money before my eyes. I can touch it with my hands. It is now awaiting transfer to me in the proportion to which I deliver the legal service I intend to render in return for it. I will follow my plan to obtain this money.”

We hope the soon-to-be-wealthy lawyer committed the note to memory because Hill’s strict instructions are to fixate on the desired money, with eyes closed, at least once a day, until the bundles of bills can clearly be seen in the mind. If all goes well, in three years’ time, there will be another millionaire, this one very much a multi, to study.

Think and Grow Rich is a work of inspiration and transformation. Its message is straightforward: The way to become wealthy and successful is to reconfigure yourself into someone who is able to make more money.

The message emerging from another large-scale examination of millionaires is distinctly different. In 1983 Thomas J. Stanley was hired by a marketing firm to interview 60 Oklahoma millionaires, and found some unexpected commonalities. In a follow-up survey, he expanded the scope to include more than 700 households across the U.S., which became the basis for the 1996 best-seller, The Millionaire Next Door, co-written with William D. Danko. The picture that emerged was of mostly self-generated wealth and of people living comfortable rather than extravagant lives in clustered upmarket communities, paid for out of earnings rather than with credit.

In the subsequent The Millionaire Mind, Stanley added additional detail to this portrait of America’s affluents. They formed themselves into what Stanley calls economically productive households. Their behaviours included coupon clipping, buying goods in bulk, refinishing instead of replacing furniture and switching phone companies to get a better deal. They did this, Stanley explained, partly because these largely self-made people were naturally practical and frugal, partly as an example to their children—whom they also talked to about financial matters, unlike most parents.

Yet, in many ways Stanley’s millionaires were not so different from Hill’s. Crucial success factors included displaying creative intelligence (the sort that lends itself to pursuing opportunities, as important as the standard version) and having the courage to invest time, energy and money when conditions warranted. The millionaires themselves identified their five most important success factors as being honest with others, being self-disciplined, getting along with people, having a supportive spouse and working harder than others. Making wise investments was only 11th, while living below one’s means registered as 25th.

With 2009’s Stop Acting Rich—published in the wake of the U.S. economic collapse—Stanley further updated his argument that careful spending was at least as important as high earning when it comes to the accumulation of wealth. In the top quartile of the millionaires he studied, more than $11 of net worth had been accumulated for every dollar of household income; in the bottom quartile, only $3. The difference, he theorized, was mostly due to consumption habits.

In his latest book Stanley notes that three times more American millionaires live in homes valued at under $300,000 than over $1 million—and, in fact, says that moving to an enclave of upscale mock tudors is akin to moving to a wealth trap. High-income earners will suddenly increase their spending on home and lifestyle in an effort to fit in, thereby reducing the surplus that would otherwise have gone to savings and investment. Expensive stores, clothes, cars, wines and furniture—indulging in these dooms all but the highest earners to a life of financial insecurity that rarely leads to millionaire status. “We lack the discipline, the guts to become rich,” is Stanley’s overall message.

Thesis and antithesis: Imagination and dreaming big for Hill; discipline and denial for Stanley. A synthesis of sorts is found in The Millionaire Teacher, a new book forthcoming this September from Andrew Hallam, a high school English teacher and writer, now living in Singapore, whose past work has appeared in MoneySense. His message: It’s possible to focus on neither making more money, nor spending less, if you can learn how to manage and invest the money you have more profitably.

Practising what he preaches, Hallam put himself through university and made himself a millionaire on a teacher’s salary. And what he preaches is more than simple denial. “You can save half what your neighbour saves, and still end up ahead,” he says, providing the figures to prove it. Mostly this is due to what he describes as the “silly behaviour” of so many people when it comes to investing.

One example among many: “They will buy actively managed mutual funds, and they will either chase hot-performing funds or fail to keep a regular commitment to their investments when the markets fall.” Those who follow an investment pattern like this will quickly and irreversibly fall behind someone who does nothing more than make regular investments in index funds, which produce higher returns. (He even shows why regular index fund purchasers of this sort will actually rejoice when markets go down.)

In its simplest form, his prescription for successful, low-stress investing is this: forget about trying to pick individual stocks or time the market (neither of which can be reliably accomplished); use index funds and exchange-traded funds (ETFs) with very low management fees; invest small sums monthly (termed dollar-cost averaging, this is a way to ensure you aren’t doing most of your buying when prices are high, as an excited investor might do).

And there you have it: between Hill, Stanley and Hallam, the three essential ingredients to the recipe for wealth. You start with the inspiration and focus required to make more money, as Hill advises. Then, once the coin starts rolling in, you spend much less than you make, as Stanley determined to be the best way forward. And finally, you take the resulting savings and invest them wisely—avoiding overpriced, faddish investments and keeping to sound fundamentals, as Hallam counsels. Balance the three and financial security—perhaps even great riches—will one day be yours.