The Millionaire Mind by Thomas J. Stanley (Book Report Sample)

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"The Millionaire Mind" by Thomas J. Stanley.
Introduction
Chapter one of this book evaluates the archetypal profiles of U.S millionaires with the term millionaire denoting U.S.A families with a net worth above one million US Dollars. A behavioral comparison is cast in this chapter between the Under Accumulators of Wealth- UAWs and the Prodigious Accumulator of Wealth- PAWs. Under Accumulator of Wealth-UAW, individuals with low net prosperity about their income. An example is a doctor earning $250,000 if their net worth not more than the (Age ×1/10 of pretax income). It is more inclined to income consumption than on income saving methods. On the other hand, Prodigious Accumulators of Wealth-PAW is denoted by the reciprocal of common UAW which usually accumulates over (Age ×1/10 of pretax income) and these people are considered as millionaires. An archetypal American millionaire would describe themselves as to be owning businesses regarded as dull-normal. These includes welding contractors, rice farmers, paving contractors, auctioneers, and pest controllers and they claim to be 80% first generation prosperous. Further, this chapter illustrates that approximately 2/3 of the millionaires work between 45-55 hours in a week and that they are meticulous investors.
Chapter one main points
Spending less than what you earn. The authors argue in this chapter that wealth is based on net worth and any person spending more than they earn will obviously fail to raise their net-worth. In particular, they say that most of the wives are organizers and thorough budgeters and that most could attest that wives are to a greater proportion more conservative on money than their men.
Do not buy status goods or live a status lifestyle. From this chapter, purchasing or hiring new and costly imported cars is of poor value since it is a repeating cycle of devaluing resources. Choosing to buy premium items and changing them frequently has the same effect as they hold no value and their cost goes to waste. Competing with the living status of your neighbor is categorized as both poor value and a feeling of the need to keeping on buying goods of ostentation to be on the same standards as your neighbor who is mostly UAWs. Stress is laid on hyper consumers who should grasp more revenue to afford superfluity goods and be more susceptible to income tax and inflation.
PAWs invest if it is worth the gain. Rather than keep their money under mattresses like misers, PAWs will invest their cash in ventures with good interest and will often go for riskier ventures only if they are worth the payback. Most of them will invest in the stock market as well as in private dealings besides venture capital that accumulate interest. They never do gambling or speculations on long-odd bonds.
Spending cash meant for tomorrow today. Further, the UAWs and majority Americans are depicted to be spending money meant for tomorrow today and give this as the prime cause of debt and no net worth under UAWs. Contrary, PAWs believe in saving today's money for the day to come. Therefore most UAWs plan under conditions like an increase in income to make use investment stratagems to accrue wealth. Nevertheless, most of them do not use investment approaches to accrue wealth on meeting the initial conditions. These prerogatives and notions habitually come from a preliminary certainty that an increase in income is the only key to solving the lack of wealth.
The tenet of Better Than. Primarily, UAWs do not keep their investment promise after income rise and their necessity for the extra income will proportionately rise about the extra income and that most UAWs are rather possessed by what they own. They measure their success level via comparison to their close neighbors and relatives contrary to millionaires. Consequently, their desire to outperform these neighbors and relatives increase with the increase in the income level unlike millionaires.
Million dollar choices. The UAWs make financial choices considered to as million dollar choices since, had the choice never been made, they would have had a million dollars excess. For instance, smokers and drinkers are categorized under UAWs since they spend their income to buy alcohol and cigarettes instead of building net worth. In another example, small cigarettes buying of over a long time can accumulate huge amounts of money, and Mr. Friend’s unfortunate parents are said to be drinkers and smokers. They spend a minimum of three cigarette packs in a day. If this figure remained constant, then it means in 46 years it will translate to a total exceeding their home value by $33,000. This small value amount of money in the long-run is astonishing. Therefore, the UAW will make choices whose financially significant is low presently, they have a value that is very significant in the future. The AUWs choices of letting us say, drinking two beer cases in a week or smoking numerous cigarette packs in a day besides the purchase of large unnecessary food and object amounts are other examples of emblematic UAW adoptions. The choices aren’t inescapably large financial procurements at the present but over a long period, the opportunity cost is very expensive for that money.
Strategies in investing. UAWs and PAWs are differentiated based on the fact that wealth creation is an outcome of investment strategies that make maximum use of unrealized income while minimizing taxable income. The UAWs are inclined towards spending more time buying cars than searching for appreciating reserves. Examples of appreciating investments like an Individual Retirement Account (IRA) add to a tax-deferred development and yield untaxed income for the owner. More or fewer UAWs do hold an IRA but having decreased portfolio value and they normally believe in Better Than as well as Better Off tenets and require to make the maximum of taxable income. Maximizing on realized revenue decreases unrealized revenue, raises paid taxes and yield low assortment values.
Further, some UAWs invest and are very active traders in the stock market while mo...