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Long Term Investing is about Your Behavior

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Investing and managing money successfully is all about how you behave. Morgan Housel

Most investors are not as smart as they thought they were a year ago in the midst of a raging bull market and rising stock prices. Fortunately, they’re also not as dumb as they feel today during a market correction, says Morgan Housel, author of “The Psychology of Money”

Investing, specifically successful investing, is, and has always been, the study of how people behave with money. And behavior is hard to teach, even to really smart and educated people. Effectively, success in investing is achieved by being patient and remaining calm through ‘punctuated moments of terror’ and volatility in the market.

You can’t sum up behavior with systems to follow, formulas to memorize or spreadsheet models to follow, according to Housel. Behavior is both inborn and learned, varies by person, is hard to to measure, changes over time, and people are prone to deny its existence, especially when describing themselves.

Actually, the best strategy is to invest as a long-term business owner which isn’t widely practiced on Wall Street or Main Street. It’s one thing to say you care about long-term value and another to actually behave as a long-term business owner. None of this is easy, but it’s never been easy. That’s what makes investing interesting.

The only thing that you can control in investing is your own behavior.

There is the old pilot quip that their jobs flying airplanes are “hours and hours of boredom punctuated by moments of sheer terror.” It’s the same in investing. Your success as an investor will be determined by how you respond to punctuated moments of terror, not the years spent on cruise control.

Managing money and investing isn’t necessarily about what you know; it’s how you behave. But that’s not how finance is typically taught or discussed in business school and at financial institutions. The financial industry talks too much about what to do, and not enough about what happens in your head when you try to do it.

There were 1,428 months between 1900 and 2019. Just over 300 of them were during a recession. So by keeping your cool and staying in the market during just the 22% of the time the economy was in or near a recession would have allowed your investments to compound and to grow significantly.

You must invest in the U.S. stock market every month, rain or shine. It doesn’t matter if economists are screaming about a looming recession or new bear market. You just keep investing. How you behaved as an investor during a few months will have the greatest impact on your lifetime returns.

There is the old pilot quip that their jobs are “hours and hours of boredom punctuated by moments of sheer terror.” It’s the same in investing. Your success as an investor will be determined by how you respond to punctuated moments of terror, not the years spent on cruise control.

For many investors, they are their own worst enemies. Since, the biggest risk to you as an investor is yourself and your own biases, your win mindset, your own misconceptions, your own behaviors, that impact your returns as an investor.

“Investing is not the study of finance. It’s a study of how people behave with money. It’s a really broad, all-encompassing field of how people make decisions around risk and greed and fear and scarcity and opportunity,” says Housel.

You can’t control what the economy is going to do or how the market will react. You can’t control what the Fed is going to do next. The only thing that you can control in investing is your own behavior. Thus, it’s important you realize that the one thing you can control, your behavior, is the thing that makes the biggest difference over time. Your investing behavior is the most fundamental factor in your investing success.

Simply, investing is about how you behave with money. And, it’s the ability to sacrifice spending money in the present with the expectation of making money in the future. Investing is a risk.

“A good definition of an investing genius is the man or woman who can do the average thing when all those around them are going crazy.” Morgan Housel

References:

  1. https://acquirersmultiple.com/2021/11/morgan-housel-investing-behavior-is-inborn/
  2. https://www.msn.com/en-us/money/topstocks/how-to-prep-for-a-bear-market-morgan-housel/vi-AAThrqT
  3. https://acquirersmultiple.com/2020/09/morgan-housel-the-importance-of-remaining-calm-through-punctuated-moments-of-terror-in-the-market/
  4. https://www.cmcmarkets.com/en/opto/investing-psychology-with-morgan-housel
  5. https://acquirersmultiple.com/2020/08/morgan-housel-the-only-thing-that-you-can-control-in-investing-is-your-own-behavior/

Inflation Comes in Hotter than Expected

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The consumer price index for all items rose 0.6% in January, driving up annual inflation by 7.5% which marked the biggest gain since February 1982

The consumer price index (CPI), which measures the costs of dozens of everyday consumer goods, rose 7.5% compared to a year ago vs. an estimate of 7.2%, the Labor Department reported.

Consumer prices in January surged more than expected over the past 12 months, indicating a worsening outlook for inflation and cementing the likelihood of substantial interest rate hikes this year, reports CNBC.

The closely watched inflation gauge was the highest reading since February 1982. On a percentage basis:

  • Fuel oil rose the most in January, surging 9.5% as part of a 46.5% year-over-year increase.
  • Vehicle costs, which have been one of the biggest inflation contributors since it began surging higher in the spring of 2021, were flat for new models and up 1.5% for used cars and trucks in January.
  • Shelter costs, which make up about one-third of the total CPI number, increased 0.3% on the month and is up 4.4% over the past year and could keep inflation readings elevated in the future.
  • Food costs jumped 0.9% for the month and are up 7% over the past year.

The hotter-than-expected inflation reading may prompt the Federal Reserve to accelerate interest rate hikes — a full percentage point increase by the start of July, according to CNBC.

References:

  1. https://www.cnbc.com/2022/02/10/january-2022-cpi-inflation-rises-7point5percent-over-the-past-year-even-more-than-expected.html

The Great Resignation: Simple Reason Why

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Employees may be planning their exits if they feel undervalued

Americans have quit their jobs and not returned to the workforce at a historic rate, an exodus some call “The Great Resignation.” The Bureau of Labor Statistics reported that more than 4.5 million workers voluntarily left their jobs during November 2021–the highest number in the 20 years.

A survey by PlanBeyond, a market research agency, indicated that employees were feeling undervalued as a top reason for the Great Resignation. Among all the reasons for quitting cited in the poll, feeling undervalued factored in by 22%.

The survey found that the lack of appreciation was the top factor for quitting among men, it was only the second biggest driver for women, edged out by a lack of respect for supervisors, which was seen as having a 22% influence on women’s likelihood to quit.

This phenomenon should come as no surprise, given that many organizations and industries have long overworked and burned out their people. Leaders have bought into the false narrative that high performance and humanity are mutually exclusive. 

Individuals are disillusioned with their employers and are increasingly looking to hold them to “moral” standards that would have been unthinkable years ago. As such, they are more loyal to organizations that convey and uphold a mission that aligns with their personal values.

While it may seem obvious that workers are more likely to stay at organizations that offer such opportunities, most employment situations have historically lacked, and continue to lack, many of these very attributes. This illustrates how too few organizations have internalized the truism that attracting and retaining great people requires them to first become great places to work. 

Though quitting is happening across all job sectors and among workers at all skill levels, it has particularly impacted hospitality and food services, wholesale trade, and in state and local education.

References:

  1. https://www.fastcompany.com/90716203/the-great-resignation-heres-a-simple-reason-why-your-employees-want-to-quit
  2. https://news.harvard.edu/gazette/story/2021/10/harvard-economist-sheds-light-on-great-resignation/
  3. https://www.fastcompany.com/90715043/5-overlooked-opportunities-that-could-turn-the-tide-of-the-great-resignation

Estate Plan and Wills

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“55 percent of all Americans—regardless of wealth or status—die without a will or estate plan in place,” American Bar Association

When R&B artist Prince died in April 2016 at the age of 57, he left behind an estate worth hundred of millions of dollars, along with music and other intellectual property of inestimable value. Despite his fame and wealth, Prince died without a will or estate plan. As a result, his estate has remained entangled in probate court for nearly six years. Although the value of his estate is estimated to be more than $100 million, it has paid more than tens of millions of dollars in administration fees.

Before you express too much astonishment that someone so wealthy left no will, ask yourself: do you have one? If the answer is no, then it should not be surprising that Prince didn’t.

If you don’t have a will, you’re not alone in America. According to the American Bar Association, 55 percent of all Americans—regardless of wealth or status—die without a will or estate plan in place, and the number can be as high as 64 percent. For some reason, many people who should have wills, whether because of their age or financial situation, just don’t.

It’s hard to understand why. Maybe because it’s depressing to think about needing one. Maybe it’s because we know we won’t be around when our estates are distributed, so we let it slide.

Regardless, everybody should have at a minimum a last will and testament if you don’t have a more complex estate plan like a trust, because it’s always cheaper to administer an estate when you have a will than when you don’t have anything.

When a person passes without a will, or what the law calls “intestate,” the estate property is distributed according to state succession laws. A probate court judge will have to determine who and how the assets are distributed in the event of your passing or incapacitation.

Additionally, if you die without a Will, you’re giving the state you reside in full control over the distribution of your assets, and intestate serves as the precedent for how decisions are made and how your assets will be distributed on your behalf.

Dying intestate means the most crucial decisions — including who will care for your children, aged parents, pets or other dependents — will be made without your input. Further, your family will be forced to endure a lengthy and costly probate process and incur potentially crippling legal expenses to regain control of your finances and assets.

Most probate court cases are open to the public, which means many of the details of a person’s estate could be aired like dirty laundry. Although, a judge could decide that the documents should be sealed.

In most states, a surviving spouse is first in line for the estate’s assets. If there is no spouse, the law provides an order of succession. In many states, if there’s no spouse, the children get the estate. If there are no children or grandchildren, then the parents inherit.

If no parents are alive, then siblings, nephews, and grandnephews inherit—and on and on—all the way to first cousins twice-removed. And, if no heirs can be found, it may not surprise you to learn that your property eventually goes to the state—a process called “escheating.”

Estate Planning

When you think about Estate Planning, you must not only think about when you die, but you must think about the possibility of becoming disable.

Estate planning is much bigger than “You get my assets after I die”—it is about setting your families up for the type of generational wealth.

An estate plan ensures your medical, financial and guardianship decisions will be handled by the person(s) you choose and trust. Your plan ensures you have an advocate acting on your behalf, carrying out your wishes and directions as you intended. It ensures you have the legal documents in place if you become disabled, as well as what will happen to your assets when you die.

Statistically speaking, most people are going to be disabled for some period of time before they die now that people are living so long. If the person becomes disabled and can’t make their own medical or financial decisions, the only way that somebody can legally make decisions for them is to go to court and do a guardianship or conservatorship proceeding. It’s expensive and time-consuming, and it’s really unnecessary.

In a will, the person who makes the will picks the executor, the person that’s in charge. You can say that you want your executor to serve without posting a bond. If that’s not stated in a will, you have to get a fiduciary bond so that the court knows you’re not going to steal the assets.

If you have minor children, a will is the only legal document where you can nominate guardians for your children.

But if you don’t have the will, then it’s the state statute that determines who is the person with priority to administer your estate. And because the state doesn’t know whether the person who says they want to administer your estate is a crook or not, the court often makes someone post a fiduciary bond. You have to pay the premium for the bond and the person has to qualify financially for a bond.

What you should learn from Prince’s passing without a Will or Estate Plan is that unless you create an estate plan now, you will leave your loved ones and potential heirs with a legal mess whether you are worth millions or not.

References:

  1. https://www.cnn.com/2016/04/28/opinions/prince-died-intestate-you-might-too-cevallos/index.html
  2. https://matermea.com/estate-planning-basics-african-americans-black-families/
  3. https://blavity.com/how-black-americans-are-missing-out-on-the-largest-wealth-transfer-in-history

Emotional Well-being

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“Watch your thoughts; they become words. Watch your words; they become actions. Watch your actions; they become habits. Watch your habits; they become character. Watch your character; it becomes your destiny.” – Lao Tzu

Experiencing stress, isolation, loss, or systemic social inequities is harmful to the health of Americans. Improving emotional well-being through research-based health promotion and prevention is critical to population health, according to the Center for Prevention and Disease Control.

Emotional well-being is your ability to produce positive emotions, moods, thoughts, and feelings, and adapt when confronted with adversity and stressful situations. It is your ability to understand the value of your emotions and use them to move your life forward in positive directions.

Emotional well-being allows you to focus on the positive, and manage the negative emotions and feelings you may have in a given situation. This can help you forge stronger relationships with those around you.

Strong emotional well-being means you’re prepared to face events that may or may not be in your control. When faced with a challenging situation, you might use one of these strategies to bring yourself into a frame of mind that allows you to manage your emotions.

Your range of emotions—and how you manage them—influences your emotional health. Here are ways you can control and improve your emotional well-being:

  1. Move your body. Do some sort of physical activity every 90 minutes. Exercise. Dance. Fold laundry. Weather permitting, get outside. Walk around the block. Run. Visit a park.
  2. Establish a routine. Create a schedule that balances the work you do with the life you want. Set time for your meetings. Block space to set goals. Create room to read. Cook a new dish. Listen to music.
  3. Connect with others. Love on your family. Check in with those who support you. Ask for help. Learn something out of your comfort zone. Spend time with someone who you respect.
  4. Forgive. Forgive others and forgive yourself. Forgiveness frees you to keep your power. Forgiveness opens the path to live in the moment. Forgiveness allows for growth and happiness.
  5. Do something for others. Offer to do something for someone you know or don’t know, for which you cannot be repaid. Pick up groceries for a neighbor. Volunteer online. Send a thank you note.
  6. Sleep. Healthy sleep gives your body the chance to repair itself. Sleep refreshes your brain to manage your memories and process information. You wake up in a better mood.
  7. Be kind to yourself. What gives you joy? Where are you most at peace? When do you have space to be you? As you are kind to yourself, you will want to extend that kindness beyond yourself.
  8. Be self-aware. Notice the thoughts, actions, habits, and character traits that serve you well. And when you spot what needs to change, you’ll be ready. You will simply know.
  9. Gratitude. Gratitude is about being thankful for the things you have in your life right now. It is, according to Harvard Medical School, “a thankful appreciation for what an individual receives, whether tangible or intangible. With gratitude, people acknowledge the goodness in their lives … As a result, gratitude also helps people connect to something larger than themselves as individuals–whether to other people, nature, or a higher power.” 

Final thoughts on emotional well-being

You become stronger emotionally as you encounter and master any situation. Whenever you have doubts, and you will, remember that you have everything you need to take care of your emotional well-being.

Expressing your thanks can enhance and improve your overall sense of emotional and overall well-being. Grateful people are more agreeable, more open, and less neurotic according to research completed in the past several decades.

References:

  1. https://positivepsychology.com/gratitude-appreciation/https://positivepsychology.com/gratitude-appreciation/
  2. https://www.betterup.com/blog/what-is-emotional-well-being
  3. https://www.cdc.gov/populationhealth/well-being/index.htm

Build Wealth in 2022: Dave Ramsey

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According to a recent survey, eight out of 10 of everyday millionaires invested in their employer’s 401(k) plan, and that simple step was a key to their wealth building. Not only that, but three out of four of those surveyed invested money in brokerage accounts outside of their company plans.

Moreover, they didn’t risk their money on single-stock investments or “an opportunity they couldn’t pass up.” In fact, no millionaire in the study said single-stock investing was a big factor in their financial success. Single stocks didn’t even make the top three list of factors for reaching their net worth.

The people in the study became millionaires by consistently saving over time. In fact, they worked, saved and invested for an average of 28 years before hitting the million-dollar mark, and most of them reached that milestone at age 49.

Dreams of trips to visit grandkids, travel adventures, and family celebrations at your paid-for home. That’s the kind of retirement many Americans dream about. You don’t have to earn six figures to turn this dream into a reality. But you do have to live and plan today with that goal in mind.

It’s important to get started building wealth no matter how old you are. Depending on your income and current financial circumstances, it might take some folks longer than others. But the fact is, you will get there if you do these five things over and over again.

Here are the five keys to building wealth:

1. Have a Written Plan for Your Money (aka a Budget)

No one “accidentally” wins at anything—and you are not the exception! If you want to build wealth, you have to plan for it. And that’s exactly what a budget is—it’s just a written plan for your money.

You have to sit down at the start of each month and give every dollar an assignment—and then stick to it! When our team completed The National Study of Millionaires, we found that 93% of millionaires said they stick to the budgets they create. Ninety-three percent! Getting on a budget is the foundation of any wealth-building plan.     

2. Get Out (and Stay Out) of Debt

According to Dave Ramsey, the only “good debt” is paid-off debt. Your most powerful wealth-building tool is your income. And when you spend your whole life sending loan payments to banks and credit card companies, you end up with less money to save and invest for your future. It’s time to break the cycle!

Trying to save and invest while you’re still in debt is like running a marathon with your feet chained together. That’s dumb with a capital D! Get debt out of your life first. Then you can start thinking about building wealth.

3. Live on Less Than You Make

Proverbs 21:20 says that in the house of the wise are stores of choice food and oil, but a man devours all he has. Translation? Wealthy people don’t blow all their money on stupid stuff. The myth that millionaires live lavish lifestyles that include Ferraris in their garage and lobster dinners every night is just that—a foolish myth. 

Here’s the truth: 94% of the millionaires we studied said they live on less than they make. The typical millionaire has never carried a credit card balance in their entire lives, spends $200 or less on restaurants each month, and still shops with coupons—even after reaching millionaire status!1 So ask yourself: Do you want to act rich or actually become rich? The choice is yours.

4. Save for Retirement

According to The National Study of Millionaires, 3 out of 4 millionaires (75%) said that regular, consistent investing over a long period of time is the reason for their success. They don’t get distracted by market swings or trendy stocks or get-rich-quick schemes—they actually save money and invest!

Being debt-free and having money in the bank to cover emergencies gives you the foundation you need to start saving for retirement. Once you get to that point, invest 15% of your gross income into retirement accounts like a 401(k) and Roth IRA. When you do that month after month, decade after decade, you know what you’re going to have in your nest egg? Money! Lots of it!

5. Be Outrageously Generous

Don’t miss this, y’all. At the end of the day, true financial peace is having the freedom to live and give like no one else. When you write a plan for your money, get rid of debt, live on less than you make, and start investing for the future, you can be as generous as you want to be and help change the world around you.

But when you make giving a part of your life, it doesn’t just change those around you—it changes you. Studies have shown over and over again that generosity leads to more happiness, contentment and a better quality of life.3 You can’t put a price tag on that!

How to Build Wealth at Any Age

That’s some big-picture financial advice that works no matter how old you are or how much money you make. It’s also true that each decade of your life will have specific challenges and opportunities. So let’s break things down decade by decade to see what you can do to maximize your savings potential.

In fact, the majority of millionaires didn’t even grow up around a lot of money. According to the survey, eight out of 10 millionaires come from families at or below middle-income level. Only 2% of millionaires surveyed said they came from an upper-income family.

The National Study of Millionaires showed a dramatic difference between how Americans think wealthy people get their money and how they actually earn and spend their money.

The salaries wealthy people make is not as much as you might think. The majority of millionaires in the study didn’t have high-level, high-salary jobs. In fact, only 15% of millionaires were in senior leadership roles, such as vice president or C-suite roles (CEO, CFO, COO, etc.). Ninety-three percent (93%) of millionaires said they got their wealth because they worked hard, and saved for the future and invested for the long term, not because they had big salaries.

References:

  1. https://www.ramseysolutions.com/retirement/the-national-study-of-millionaires-research
  2. https://www.ramseysolutions.com/retirement/how-to-build-wealth
  3. https://www.ramseysolutions.com/retirement/the-national-study-of-millionaires-research

Investing in Bonds

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The US bond market’s value is $46 trillion. It is comparable in size to the US stock market. At $119 trillion, the global bond market is even larger. The reason why the bond market is so large is in part because governments issue bonds, not stocks. For companies, bond financing can also be a more attractive source of financing than equity. PIMCO Investments (Introduction to Bonds)

Today, market uncertainty and volatility has become the short term rule, and not just the exception. Now more than ever, bonds can offer important benefits to help you stay on track with your long-term wealth goals with less risk.

Historically, bonds have offered greater stability than riskier investments like stocks, real estate or commodities. Bonds can also help you diversify the assets in your portfolio and potentially smooth out some of the stock market volatility and rough spots.

Bonds are basically loans from investors and a source fixed income for investors. A company, state or government issues bonds to raise money and capital. When an investor buys a bond they give the issuer – the company or government who issued the bond – a loan. Often, the bond issuer agrees to pay its investors periodic “fixed” interest payments (hence the name fixed income) while the loan is outstanding and to pay back the full loan at the end of the bond’s life (called maturity).

The amount that is given to the issuer is called the principal, or face value, of the bond. In return, the issuer agrees to pay the investor both the face value of the loan on a specific date (the “date of maturity”) and to pay the investor periodic interest payments, known as coupons, in specific intervals.

Source: PIMCO Introduction to Bonds

The coupon is periodic interest payment that the bond holder receives from the issuer from its issue date until it matures. The coupon rate (expressed as a percentage) is calculated by adding the sum of coupons paid per year and dividing it by the bond’s face value. Often coupons are paid semi-annually.

Yield, which is often used when discussing bonds, is the annual net profit that an investor earns on an investment. Yield takes into account the bond’s fluctuating changes in value and is usually reported as an annual percent figure. The interest rate is the percentage charged by a lender for a loan. The yield on new bonds reflects interest rates at the time they are issued.

Unlike stocks, bonds issued by companies do not generally give investors ownership rights. Instead, bonds provide a stream of income. When held in a portfolio with stocks, bond investments can offset some of the volatility in the equities market.

Bonds can play an important role in diversifying a portfolio. Three key potential reasons to consider bonds:

  • Defense Against Capital Loss — Barring default, the principal value of a bond is expected to be returned to the investor at maturity. This can make bonds attractive to risk-averse investors who are concerned about losing capital.
  • Income — Bonds can provide investors with a source of income in the form of coupon payments. Often coupon rates are set, so investors can receive this income during different market conditions.
  • Diversification — Bonds may help diversify a portfolio of riskier assets like equities and this is generally due to the low to negative correlation of bonds with other asset classes.

Bonds can be issued by companies or governments when they want to raise money. There are several types of bonds available for investing, including:

  • Government bonds – Bonds that are issued by a government. These are lower yield because the government guarantees that these bonds are backed by the full faith and credit of their government.
  • Corporate bonds – Many public and private companies issue bonds to help finance their ongoing operations. These bonds can often offer higher yields than municipal or U.S. Treasury securities, although they may entail a greater risk of default.
  • Agency bonds – Debt securities issued by government sponsored agencies for public purposes, such as increasing home ownership or supporting small businesses.
  • High-yield – Bonds with ratings below BBB are often referred to as “junk” bonds. These bonds typically provide higher yields than investment- grade bonds, but have a higher risk of default.
  • Municipal bonds – Municipal bonds, or munis, are debt securities issued by state or local governments to finance public projects. Interest income is typically free from federal income taxes, and if held by an investor in the state of issuance, may be exempt from state and local taxes as well.

References:

  1. https://www.pimco.com/handlers/displaydocument.ashx
  2. https://www.pimco.com/en-us/bonds

All investments contain risk and may lose value.There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market.

Attitude of Gratitude

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“The secret of happiness, you see, is not found in seeking more, but in developing the capacity to enjoy less.” – Socrates

Gratitude is good for your body, your mind, your wealth, and your emotional well-being. Yet, Americans usually equate happiness to having more in life. And by more, think of monetary or physical possessions — a bigger house, larger bank account, more clothes, the latest gadgets, a faster car. Yet, once you acquire more shiny brand new things, rarely do you find yourself any happier and satisfied.

Instead of acquiring more stuff, the Greek philosopher Socrates taught his fellow Greek citizens to be happy with less. In other words, enjoy that pair of jeans you love so much that you wear it all the time, instead of worrying about the latest fad designer jeans at the boutique that costs two weeks pay.

Simply put, gratitude changes your focus to what you have. Since, it doesn’t matter how much you have if you don’t appreciate it! Without gratitude, you’ll never feel successful, no matter how much you have and own. So regardless of your level of wealth and financial success, practicing gratitude is essential. You get more of what you focus on…what you focus on expands!

According to the Harvard Medical School, gratitude is: “a thankful appreciation for what an individual receives, whether tangible or intangible. With gratitude, people acknowledge the goodness in their lives … As a result, gratitude also helps people connect to something larger than themselves as individuals–whether to other people, nature, or a higher power” 

“The more man meditates upon good thoughts, the better will be his world and the world at large.” Confucius

Every day won’t be perfect, but focusing on what we are grateful for tends to wash away feelings of anger, sorrow and negativity. And there is added benefits to improving your mindset, attitude and outcome. Recent studies show that being grateful and expressing gratitude leads to better physical and emotional health.

“An attitude of gratitude means making it a habit to express thankfulness and appreciation in all parts of your life, on a regular basis, for both the big and small things alike,” according to Lewis Howe, author of the inspirational book, The School of Greatness. “If you concentrate on what you have, you’ll always have more. If you concentrate on what you don’t have, you’ll never have enough.”

Thus, you must look throughout your day for things and activities to be grateful for, and something to be grateful for will always show up. Just because gratitude is good doesn’t mean it’s always easy.

Do not lose sight of being grateful for simply having a challenge or mountain to climb (it beats the alternative). Only when you began feeling gratitude for the opportunity to serve, to learn and to grow will a shift in attitude and happiness happen.

You can view gratitude as an emotional muscle that will grow and strengthen with intentional use. Make gratitude a habit by starting a gratitude journal, incorporating gratitude into your morning routine practice, or perhaps by having a gratitude accountability partner whom you can email daily.

“Everything — peace of mind, happiness, getting the most out of what you have — springs off of the word ‘gratitude’…True gratitude is based on all things — success and failure. If I’m truly grateful, I’m going to maintain that regardless of the outcome. Otherwise, it’s not gratitude.” Cael Sanderson, Head Wrestling Coach, Pennsylvania State University

Gratitude can be made a habit that you can practice every morning. According to motivational speaker Tony Robbins, gratitude is a ritual that can be broken down into three, three-minute sections, which can provide structure for living a life of gratitude. The three sections are:

  • First three minutes, think of three things you’re grateful for. Tony suggests that one of these be very simple—like how beautiful the sunset was last night or the great night’s sleep you just got.
  • During the next three minutes, focus on creating gratitude by imagining an inner presence that can heal and solve any obstacles in your life.
  • For the last three minutes, identify three things you’re absolutely going to make happen for yourself—what he calls his “three to thrive.”

Imagine what it would feel like to complete these tasks, and “see it as though it’s already been done,” Robbins said.

Enjoying less and appreciating the things you own are not difficult. All it takes is a change of mindset and an attitude of gratitude. Since, gratitude makes dealing with the difficult things and experiences easier. So be grateful when things are challenging, when you don’t feel like it, or when you fall short of achieving your goal.

To become more grateful, there are several everyday tips for living a life of gratitude, according to Robert A. Emmons, Ph.D., a leading scientific expert on gratitude:

  • Keep a Gratitude Journal. Establish a daily practice in which you remind yourself of the gifts, grace, benefits, and good things you enjoy. Setting aside time on a daily basis to recall moments of gratitude associated with ordinary events, your personal attributes, or valued people in your life gives you the potential to interweave a sustainable life theme of gratefulness.
  • Remember the Bad. To be grateful in your current state, it is helpful to remember the hard times that you once experienced. When you remember how difficult life used to be and how far you have come, you set up an explicit contrast in your mind, and this contrast is fertile ground for gratefulness.
  • Ask Yourself Three Questions. Utilize the meditation technique known as Naikan, which involves reflecting on three questions: “What have I received from __?”, “What have I given to __?”, and “What troubles and difficulty have I caused?”
  • Learn Prayers of Gratitude. In many spiritual traditions, prayers of gratitude are considered to be the most powerful form of prayer, because through these prayers people recognize the ultimate source of all they are and all they will ever be.
  • Use Visual Reminders. Because the two primary obstacles to gratefulness are forgetfulness and a lack of mindful awareness, visual reminders can serve as cues to trigger thoughts of gratitude. Often times, the best visual reminders are other people.
  • Make a Vow to Practice Gratitude. Research shows that making an oath to perform a behavior increases the likelihood that the action will be executed. Therefore, write your own gratitude vow, which could be as simple as “I vow to count my blessings each day,” and post it somewhere where you will be reminded of it every day.
  • Watch your Language. Grateful people have a particular linguistic style that uses the language of gifts, givers, blessings, blessed, fortune, fortunate, and abundance. In gratitude, you should not focus on how inherently good you are, but rather on the inherently good things that others have done on your behalf.

It’s vitally essential to live your life and build your wealth based in gratitude. With gratitude comes the realization that we get more than we deserve and we’re content with what we have, received and accomplished.

“Cultivate the habit of being grateful for every good thing that comes to you, and to give thanks continuously. And because all things have contributed to your advancement, you should include all things in your gratitude.” Ralph Waldo Emerson

Research has shown that there is a strong link between happiness and gratitude. And there is a lot in your life to be grateful for! Do you want to be happy and wealthy? Stop waiting for happiness to knock on your door. Go out and make a friend or two. Stop thinking others have it better than you do.

Stop looking at what others have and start being grateful for what you have. You probably have a roof over your head and food in your stomach every day. The average world wide salary in 2012 was $18,000, adjusted for purchasing power. If you’re pulling in $19,000 you’re above average and, therefore, in terms of the entire world, rich. Celebrate your new found rich status, by inviting a couple of friends over. It will make you happier.

You must be grateful and love your life whether you’re winning or losing; whether you’re successful or unsuccessful; and whether you’ve built wealth or failed to build wealth. Just be grateful for the opportunity and your life. 

“Gratitude unlocks the fullness of life. It turns what we have into enough, and more. It turns denial into acceptance, chaos into order, confusion into clarity…It turns problems into gifts, failures into success, the unexpected into perfect timing, and mistakes into important events. Gratitude makes sense of our past, brings peace for today and creates a vision for tomorrow.” Melodie Beattie, Author of ‘Co-dependant No More’

References:

  1. https://positivepsychology.com/gratitude-appreciation/https://positivepsychology.com/gratitude-appreciation/
  2. https://celador.net/the-secret-of-happiness-e611f6471b8f
  3. https://www.huffpost.com/entry/how-to-have-an-attitude-of-gratitude_b_8644102
  4. https://partners4prosperity.com/thank-and-grow-rich-gratitude-and-wealth/
  5. https://greatergood.berkeley.edu/article/item/why_gratitude_is_good/
  6. https://greatergood.berkeley.edu/profile/robert_emmons
  7. https://onwardstate.com/2020/05/08/4-lessons-i-learned-from-cael-sanderson-after-covering-him-for-4-years/

Summary: The 7 Habits of Highly Effective People

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“Dependent people need others to get what they want. Independent people can get what they want through their own effort. Interdependent people combine their own efforts with the efforts of others to achieve their greatest success.” Stephen R. Covey

Stephen R. Covey’s seminal book, The 7 Habits of Highly Effective People, remains relevant because it focuses on timeless principles of fairness, integrity, honesty, and human dignity. It’s timeless principles are also extremely relevant for those desiring to develop a wealth mindset and to build wealth.

In his book, Covey argues that it’s your character that needs to be cultivated to achieve effectiveness and sustainable success, not your personality and behavior. Effectively, what we are says far more than what we say or do.

Character is closely related to moral and ethical values. It focuses on the traits that are unique to a person. Character is often regarded as the true self, meaning that it represents deep rooted attributes possessed by a person.

While, personality is often referred to as the mask identity of a person. It is reflected by the outer appearance and behavior that may or may not be true to inner character.

In a nutshell, the seven habits of highly effective people are:

  1. You take initiative. “Be proactive.”
  2. You focus on goals. “Begin with the end in mind.”
  3. You set priorities. “Put first things first.”
  4. You only win when others win. “Think win/win.”
  5. You communicate. “Seek first to understand, then to be understood.”
  6. You cooperate. “Synergize.”
  7. You reflect on and repair your deficiencies…you focus on your well-being. “Sharpen the saw.”

In short, you are what you habitually do, so adopt productive habits. You have the ability to improve your habits and your life.

Covey’s seven habits are composed of the primary principles of character upon which happiness and success are based. Rather than focusing on altering the outward manifestations of your behavior and attitudes, it aims to adapt your inner core, character, and motives.

Your character is a composite of your habits, which factors heavily in your life. Because habits are consistent, unconscious patterns, they constantly express your character and result in your effectiveness or ineffectiveness. Habits are deeply ingrained and you are constantly pulled in their direction. Breaking deeply imbedded, habitual tendencies such as procrastination, impatience, criticalness or selfishness that inhibit effectiveness involves more than simple willpower or a few minor changes.

“What we are communicates far more eloquently than anything we say or do.” Stephen R. Covey

A habit is the intersection of knowledge, skill, and desire:

  • Knowledge is the theoretical paradigm, the what to do and the why.
  • Skill is the how to do.
  • Desire is the motivation, the want to do.

Creating a habit requires work in all three dimensions–to listen, knowing how to listen and to want to listen. By working on knowledge, skills, and desire, we can break through to new levels of personal and interpersonal effectiveness as we break from old paradigms. 

Paradigms (another term for mindset) are powerful because they create the lens through which we see the world… “If you want small changes in your life, work on your attitude. But if you want big and primary changes, work on your paradigm.” – Dr. Stephen R. Covey

Habit 1: Be Proactive – Principle: I am free to choose and am responsible for my choices.

Your life doesn’t just “happen.” Whether you know it or not, it is carefully designed by you. The choices, after all, are yours. You choose happiness. You choose sadness. You choose decisiveness. You choose ambivalence. You choose success. You choose failure. You choose courage. You choose fear. Just remember that every moment, every situation, provides a new choice. And in doing so, it gives you a perfect opportunity to do things differently to produce more positive results.

Habit 1: Be Proactive is about taking responsibility for your life. You can’t keep blaming everything on your parents or grandparents. Proactive people recognize that they are “response-able.” They don’t blame genetics, circumstances, conditions, or conditioning for their behavior. They know they choose their behavior.

All external forces act as stimuli that we respond to. Between the stimulus and the response is your greatest power–you have the freedom to choose your response. One of the most important things you choose is what you say. Your language is a good indicator of how you see yourself. A proactive person uses proactive language–I can, I will, I prefer, etc.

Being proactive means more than taking initiative. It means we are responsible for our own lives. Our behavior is a function of our decisions, not our conditions. 

“It’s not what happens to us, but our response to what happens to us that hurts us.” Stephen R. Covey

Habit 2: Begin with the End in Mind – Principle: Mental creation precedes physical creation.

Sometimes people find themselves achieving victories that are empty–successes that have come at the expense of things that were far more valuable to them. If your ladder is not leaning against the right wall, every step you take gets you to the wrong place faster.

Habit 2 is based on imagination–the ability to envision in your mind what you cannot at present see with your eyes. It is based on the principle that all things are created twice. There is a mental (first) creation, and a physical (second) creation. The physical creation follows the mental, just as a building follows a blueprint.

If you don’t make a conscious effort to visualize who you are and what you want in life, then you empower other people and circumstances to shape you and your life by default. It’s about connecting again with your own uniqueness and then defining the personal, moral, and ethical guidelines within which you can most happily express and fulfill yourself.

Begin with the End in Mind means to begin each day, task, or project with a clear vision of your desired direction and destination, and then continue by flexing your proactive muscles to make things happen.

Covey states that the most effective way to begin with the end in mind is to create a personal mission statement. It should focus on the following:

  • What you want to be (character)
  • What you want to do (contributions and achievements)
  • The values upon which both of these things are based

In time, your mission statement will become your personal constitution. It becomes the basis from which you make every decision in your life. By making principles the center of your life, you create a solid foundation from which to flourish.

To begin with the end in mind means to start with a clear understanding of your destination. You need to know where you are going in order to better understand where you are now so that the steps you take are always in the right direction. 

Habit 3: Put First Things First – Principle: Effectiveness requires the integrity to act on your priorities.

Habit one encourages you to realize you are in charge of your own life, and habit two is based on the ability to visualize and to identify your key values. Habit 3 is the practical fulfillment of Habits 1 and 2. Habit 1 says, “You are the creator. You are in charge.” Habit 2 is the first mental creation, based on imagination, the ability to envision what you can become. Habit 3 is the second creation, the physical creation. It focuses on the practice of effective self-management. By asking yourself the above questions, you become aware that you have the power to significantly change your life in the present.

To live a more balanced existence, you have to recognize that saying no to everything that comes along is okay. There’s no need to overextend yourself. All it takes is realizing that it’s all right to say no when necessary and then focus on your highest priorities.

Habit three concerns itself with putting the most important things first. This means cultivating the ability to say no to things that don’t match your guiding principles. To manage your time effectively, your behaviors and actions must adhere to the following habit 5 concepts:

  1. They must be principle-centered.
  2. They must be conscience-directed, meaning that they give you the opportunity to organize your life in accordance with your core values.
  3. They define your key mission, which includes your values and long-term goals.
  4. They give balance to your life.
  5. They are organized weekly, with daily adaptations as needed.

The focus is on improving relationships and results, not on maximizing your time.

Habit 4: Think Win-Win – Principle: Effective, long-term relationships require mutual respect and mutual benefit.

Think Win-Win is a character-based code for human interaction and collaboration.

Win-win sees life as a cooperative arena, not a competitive one. Win-win is a frame of mind and heart that constantly seeks mutual benefit in all human interactions. Win-win means agreements or solutions are mutually beneficial and satisfying.

To adopt a win/win mindset, you must cultivate the habit of interpersonal leadership. This involves exercising each of the following traits when interacting with others:

  • Self-awareness
  • Imagination
  • Conscience
  • Independent will

To be an effective win/win leader, Covey argues that you must embrace five independent dimensions:

  1. Character: This is the foundation upon which a win/win mentality is created, and it means acting with integrity, maturity, and an “abundance mentality” (i.e., there is plenty of everything for everyone, one person’s success doesn’t threaten your success).
  2. Relationships: Trust is essential to achieving win/win agreements. You must nourish your relationships to maintain a high level of trust.
  3. Agreements: This means that the parties involved must agree on the desired results, guidelines, resources, accountability, and the consequences.
  4. Win/win performance agreements and supportive systems: Creating a standardized, agreed-upon set of desired results to measure performance within a system that can support a win/win mindset.
  5. Processes: All processes must allow for win/win solutions to arise.

Win/Win is not a technique; it’s a total philosophy. This frame of mind and heart constantly seeks mutual benefit in all human interactions. It’s not your way or my way; it’s a better way, a higher way.

Habit 5: Seek First to Understand, Then to Be Understood – Principle: To communicate effectively, we must first understand each other.

Communication is the most important skill in life. You spend years learning how to read and write, and years learning how to speak. But what about listening?

If you’re like most people, you probably seek first to be understood; you want to get your point across. And in doing so, you may ignore the other person completely, pretend that you’re listening, selectively hear only certain parts of the conversation or attentively focus on only the words being said, but miss the meaning entirely.

Seek first to understand involves a deep shift in paradigm. We typically seek first to be understood. Instead, most people listen to the reply. They’re either speaking or preparing to speak. 

Habit 6: Synergize – Principle: The whole is greater than the sum of its parts.

To put it simply, synergy means “two heads are better than one.” Synergize is the habit of creative cooperation. It is teamwork, open-mindedness, and the adventure of finding new solutions to old problems.

Synergy is the highest activity in all life – the true test and manifestation of all the other habits combined. Synergy catalyzes, unifies, and unleashes the greatest powers within people. Simply defined, synergy means that the whole is greater than the sum of its parts. 

Habit 7: Sharpen the Saw – Principle: To maintain and increase effectiveness, we must renew ourselves in body, heart, mind, and spirit.

Sharpen the Saw means preserving and enhancing the greatest asset you have–you. It means having a balanced program for self-renewal in the four areas of your life:

  • Physical: exercise, nutrition and sleep
  • Social/Emotional: meaningful human connections and relationships
  • Mental: learning, visualizing, acquiring new knowledge, growing
  • Spiritual: mindfulness, art, meditation, music, time in nature, prayer and service

As you renew yourself in each of the four areas, you create growth and change in your life. Sharpen the Saw keeps you fresh so you can continue to practice the other six habits. You increase your capacity to produce and handle the challenges around you. Without this renewal, the body becomes weak, the mind mechanical, the emotions raw, the spirit insensitive, and the person selfish.

Feeling good doesn’t just happen. Living a life in balance means taking the necessary time to renew yourself. Remember that every day provides a new opportunity for renewal–a new opportunity to recharge yourself instead of hitting the wall. All it takes is the desire, knowledge, and skill.

Habit 7 makes all of the other Habits possible. When you sharpen the saw, you preserve and enhance the greatest asset you have – yourself. 

In conclusion, real change comes not from the outside in, but from the inside out, explains Covey. And the most fundamental way of changing yourself is through a paradigm shift.

There are so many people out there who are excelling in their work lives but failing miserably in their personal lives. They’re a success story on the outside but their lives are falling apart. Their problems are deep and painful. A quick fix doesn’t work in this case. To change such situations, you have to improve yourself and your mindset.

A paradigm is a way you see and perceive the world. Like a map of a territory, a paradigm is a model of something else. Two people can see the same thing and interpret it differently, and they’ll both be correct. It’s not logical but psychological.

Your paradigms affect the way you interact with people.

“Of course, things can hurt us physically or economically and can cause sorrow. But our character, our basic identity, does not have to be hurt at all.” Stephen R. Covey

References:

  1. https://resources.franklincovey.com/mkt-7hv1/the-7-habits-of-highly-effective-people
  2. https://www.oberlo.com/blog/7-habits-of-highly-effective-people-by-stephen-covey-summary
  3. https://www.stratechi.com/7-habits/
  4. https://www.nps.gov/common/uploads/teachers/lessonplans/7%20Habits-of-Highly-Effective-People.pdf
  5. https://earlgreyninja.com/the-7-habits-of-highly-effective-people-stephen-r-covey/

Mindset and Paradigm

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“Change your habits, change your life.” Bob Proctor

The number one thing that will stop you from achieving your financial goals and life’s purpose is the way you think…your limiting beliefs and negative thoughts, explains self help guru Bob Proctor. If you want to change your results, you must first change yourself, specifically your paradigms.

Paradigms are nothing more than a group of habits that are programmed into the subconscious mind that control your behaviors which control your results, explains Bob Proctor. Thus, it’s essential to understand that your habits and behaviors control your results.

“We think we see the world as it is, when in fact we see the world as we are.” Stephen R. Covey

Paradigms affect the way we behave and the results we achieve in life, according to Stephen R. Covey. In explaining paradigm, Covey described an event when he “was on a subway in a very large metropolitan city. It was Sunday morning, quiet, sedate. When a bunch of young kids came running into the subway car and their father followed. He sat near me and the kids went crazy on that subway, running up and down, turning people’s papers aside, just raucous and rude. I’m sitting there thinking, ‘I can’t believe this, their father does nothing!’ I look at my attitude, attitude to try to control, but look what I could see.

After a few minutes, attitude went into behavior, ‘Sir, do you think you could control your children a little? They are very upsetting to people.’

‘Oh yeah.’ He lifted his head as if to come to an awareness of what was happening. ‘Yeah, I don’t know. I just guess I should. We just left the hospital. Their mother died just about an hour ago and I guess they don’t know how to take it and frankly I don’t either.’”

Imagine the paradigm shift that took place there. Imagine now what the attitude and the behavior would be based upon that paradigm.

The mind’s default, for most people, contains a plethora of negative thoughts and self-limiting beliefs. The mind tends to default to thinking that bad things will happen, that you’re not worthy, or that you’re not likable. ”

Until you change your paradigms regarding money or your financial mindset, money and wealth will not help you realize your dreams or achieve financial freedom.

“You must begin to understand that the present state of your bank account, your sales, your health, your social life, your position at work, etc., is nothing more than the physical manifestation of your previous thinking.”  Bob Proctor

References:

  1. https://www.lifehack.org/900263/reactive-vs-proactive
  2. https://resources.franklincovey.com/blog/paradigms