It seems as if everyone is pitching a "self-help" book these days, from celebrities to reality TV stars. But one self-improvement book -- Think and Grow Rich by Napoleon Hill -- stands out from the crowded field, and it deserves a place on every investor's desk.
Arguably the granddaddy of all self-help books, Hill's classic is a sensible, inspiring, easy-to-read primer that has proven invaluable to investors for more than seven decades. In 1908, Hill began interviewing several hundred of the most successful people in the US, including Andrew Carnegie, Thomas Edison, Henry Ford, John D. Rockefeller, and Alexander Graham Bell. His goal was to find their secrets for making money.
Think and Grow Rich, published in 1937, details the time-tested principles these business leaders used to build wealth. Here's what he discovered, and how investors can benefit.
Have an investing "mission." Decades before Stephen Covey wrote The 7 Habits of Highly Successful People, Hill wrote about the importance of a "chief definite aim." In simple terms: Have a plan before you start moving money around. Hill's strategy is to fix a dollar amount in your mind -- a desired net worth perhaps -- and give yourself a definite time frame to reach it. Envision a clear mental picture of the specific amount you want to see in your brokerage account. Think of this as the cornerstone of your investment plan.
Jot it down. "If you demand riches," Hill wrote, "determine what form, and how much will be required to satisfy you." Once you know the amount you want (it doesn't matter if it's $10,000 or $100,000) write down the number along with a deadline for amassing it somewhere where you can see it every day. Tape it to the back of your BlackBerry, carry a note in your pocket, or post it at your desk. Does this really work? Actor Jim Carrey famously wrote a check to himself for a million dollars as motivation and kept it in his wallet while he struggled to make it in show business. Sure enough, the day came when he cashed that check. Why not you?
Act on opportunity. "Opportunity," Hill wrote, "often comes disguised in the form of misfortune or temporary defeat." Well, we've had plenty of that during the past couple of years. If you're a regular visitor to this site, then you're probably an active opportunity seeker, or someone with the potential to become one. Just beware: Some people keep waiting for some undefined "right time" to start saving and investing until, as Hill warned, "the waiting becomes a permanent habit."
Master fear. Hill lays out what he calls the "ghosts of fear" that keep us from financial rewards. Of these, the most debilitating is "fear of poverty." Think of these fears as the myriad excuses that prevent us from making changes or taking action. Hill challenges the reader to confront fears and rise beyond them. He suggests that many successful people, from steel magnates to investment tycoons, have benefited from mental toughness. Hill, a believer in affirmations, maintained that a regular diet of positive thoughts and a belief in your own abilities are critical elements of success. "No man is ever whipped until he quits in his own mind," he wrote.
Be decisive. These days, there are far too many opinions coming at us from all directions, including TV and Twitter. Everyone is telling us what to do. It's easy to sit around, listen, and weigh opinions rather than implementing a strategy. But Hill found the world's most successful people tended to be decisive: quick to make decisions and slow to change them. This doesn't mean being brash or impulsive, or not thinking things through, but rather that the most successful people take their own counsel and limit their dependence on the opinions of others.
Fail forward. There's no shortage of people who have lost money in the market. Failure can be paralyzing, depressing, and debilitating. But, according to Hill, it's an absolute prerequisite for success. Don't envy the newbie investor who makes a killing on some stock picks. Pity him, because he has yet to be humbled. And don't join the ranks of the bruised-ego complainers who would rather not get back up on their feet. Remember Hill's mantra: "Every adversity, every failure, every heartache carries with it the seed of an equal or greater benefit."
Employ a "mastermind alliance." Hill tells of a powerful technique Ben Franklin used to support his various endeavors. Using a "mastermind alliance" of like-minded friends and associates, Franklin cultivated a network that helped him in all aspects of his life, from running a printing business to founding a nation. Franklin didn't go it alone and neither should you. So cultivate the power of your own network of fellow investors both in-person and online, including right here on Investor Uprising. As Hill stated, "Associate with the company of those who demand and receive riches."