Introduction
The ordinary millionaire is something of a paradox; someone who is wealthy but you would not necessarily know it except through your personal relationship with them. In other words, by typical wealth standards, they are ordinary and average however, upon further review they are wealthy – sometimes at a staggering measure.
I’ve had the blessed fortune of meeting and rubbing elbows with many such people. With some of these I’ve spent considerable amounts of time with and I’ve noticed some common patterns among them. The purpose of this article is to share with you the most effective lessons I’ve learned from them.
Lesson 1: Use Debt to Your Advantage
Debt is the two edge sword that the ordinary millionaire uses with skill and discipline. While it is true you can accumulate substantial wealth through regular and automated investing without borrowing to invest, this will take 20-30 years to accumulate your first million. If your goals are to accomplish this same milestone in 10-15 you will need the undeniable power of borrowed money to invest. Most of the millionaires I know, but not all of them, used leverage to buy a profitable business, expensive machinery, equipment, or a revenue generating property.
The key is that the revenue generated from operations services the debt, and in later years, the asset could be sold for more than the purchase price.
Lesson 2: Invest in Assets That Go Against the Dollar
One thing that should be abundantly clear is that millionaires do not invest in cash, or cash denominated securities like bonds or government debt. Cash, currency, dollars, and cents are all mediums of exchange or, in other words, the stuff we use to buy things with. What I have noticed numerous times is that ordinary millionaires tend to favor assets, businesses, and property. These just so happen to rise in value while the dollar declines. To be honest, I’m not sure if this is done on purpose or if this is just coincidence, but the common thread is they love things that appreciate in value and even better if they can generate cash.
Some common assets they are drawn to:
- Dividend stocks
- Rental property
- Vacation property
- Commercial property
- Gold
- Service oriented businesses like accounting, legal, chiropractor, dental, and medical
- Bonds
- Growth stocks (they remember the dot com bubble)
- Crypto (they think its a scam or another bubble)
- Silver (too heavy, too bulky, too similar to gold)
- International stocks (they keep to their own country)
Please keep in mind that this is NOT investment advice. These are just my observations and common threads that emerge when I talk with them about business and investing. As proof to this, you’ll know I love crypto and I get into sometimes with these ordinary millionaires, and it can get heated, but I suppose this is all part of the process.
Also note that cash is not on either list. While they love cash and love to hold and hoard it, they know they need to deploy it within a year or two so they actively look for opportunities to invest it.
Lesson 3: Everything is Negotiable
Here are some of the best quotes I’ve literally heard from my ordinary millionaire contacts:
- “I never pay retail, at worst I’ll settle for wholesale, but I refuse to pay the Sucker’s price.”
- “When I’m selling I always try and create a sense of urgency and scarcity. Make them think someone is behind them with a cash offer.”
- “I’m good at negotiating, I’m just greasy enough, so when I buy on Kijiji, I have an advantage and I get to monetize my skills.”
- “Vanity, perfection, shiny and new, are the most expensive things on sale, and not only that, its impossible to negotiate against. It’s pride wrapped in a pretty wrapper.”
When possible, buy used, buy privately, buy at auctions and always offer less than the asking price. Have a backup offer from a competitor and be patient and willing to walk.
Negotiating gets better and easier the more times you practice it. On top of this, this is one of the most effective ways to make your current income last longer, and create more left over income for investing.
Lesson 4: Work Hard & Be Adaptable
Work hard, work long, work smart, but above all, work hard! There just seems to be a pervasive theme with waking up early, meditating or praying, and then working hard at something you love.
Funny enough, most of the ordinary millionaires I know aren’t into sports at all. Sure they exercise, watch what they eat, and do their best to keep their health in check, but that is where it stops. They are not drawn into the mainstream media hype of team sports and the latest standings. I know some millionaires are, and some billionaires even own team sports, but among the wealthy folks I know, not one is into professional team sports.
It would seem work, business and investing is their sport and fitness is done in order to maintain and stay healthy. They prefer the sweat of hard work over the sweat of sport. Perhaps they think its wasted energy that could be put to better use?
Lesson 5: Take Asymmetric Risk
The ordinary millionaire takes asymmetric risk as often and frequently as possible. This means that they are aware of their talents, abilities, and strengths and work within this scope. On top of this, they know their limits and weakness and avoid those projects or investments. Working and investing within their scope and strength allows them to bend the risks to their advantage and deliver outsized returns.
What is important to note is what is risky to one millionaire, is not risky to another. One will be skillful with stocks while another is a master with property and real estate. The take-away point here is to know your abilities and work within it; broaden your skills, but play to your strengths.
Lesson 6: Gratitude
Thankfully, and knock-on wood, I have yet to meet an ungrateful millionaire. I’m sure they exist, but I’ve been fortunate enough to have never met them. In contrast, the ordinaire millionaires I know are all very grateful, gracious and generous with their time and gratitude.
When people are grateful for what they already have, it tends to make room or space in their life to receive more. When we acknowledge this and give thanks for the abundance in our lives, it would seem that the Universe, God, or our Supreme Power gives us even more.
Regardless, one thing is certain, you cannot lose when you give thanks or adopt an attitude of gratitude.
Lesson 7: Sweat your Expenses – Esp. the Monthly
The last lesson I’ve learned is that they care and sweat their expenses; always trying to lower them and get a better deal. What’s more, they care the most about the monthly subscriptions and payments that get charged seemingly without permission. These are the payments and expenses that can make the most difference when they are controlled and managed.
I believe there is a thought that once you make it and you’re wealthy you can forget the budget, or care a whole lot less about your expenses; but the truth is managing these is what will make the biggest difference. The difference between making it and also keeping it. You will not be able to forgo the management of your expenses. As such, we need to get a handle of them now and master these.
Conclusion
In summary, the lessons I’ve learned from ordinary millionaires are the simple, common sense lessons you’ve already heard about. Of course, it always helps to have them repeated and reinforced with real-life examples. Never having met a multi-millionaire who owns a yacht, with weekly vacations to New York City or France, I’ve been blessed with seeing realistic examples of men and women who work hard and invest their profits prudently. I suppose the best lesson is that they take calculated risk where they have an advantage.
I sincerely hope this list has been helpful – reach out to me on twitter and share your lessons with me! What have you learned or what am I missing on this list?
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