The Frugal REIT Investor by Brad Thomas

Summary

  • "Wealth is not the same as income. Wealth is what you accumulate, not what you spend." Thomas Stanley.
  • "The foundation stone of wealth accumulation is defense." Thomas Stanley.
  • Investors must select stocks with a significant margin of safety, and that means that he or she must always behave like a "frugal REIT investor."
  • This idea was discussed in more depth with members of my private investing community, iREIT on Alpha. Get started today »

Did you catch my article from earlier this week? The one titled "Beware of Fool's Gold: 3 REITs to Avoid."

In it, I did some notable quoting, such as the following three:

"A REIT that yields 10% almost always means that investors perceive very low growth - or even worse - a potential dividend cut." - Ralph Block
"I am not impressed with what people own. But I'm impressed with what they achieve." - Thomas Stanley
"Allocating time and money in the pursuit of looking superior often has a predictable outcome: inferior economic achievement." - Thomas Stanley
For those of you who don't know the two individuals "quotees" above, Ralph Block was a late REIT expert and still a great one. His published advice, particularly in his book Investing in REITs, is phenomenally detailed and extremely useful for any well-rounded investor.

Then there's Thomas Stanley, also a well-respected author. Stanley, who passed away in 2015, co-wrote The Millionaire Next Door with his fellow Ph.D.-holder William D. Danko.

Author of seven award-winning books total, in his day, he was considered to be the foremost authority on the affluent - and how they became that way. That might sound like a shallow focus for someone of his elevated education and academic reach.

However, that perspective is missing the mark. By far.

Valuable Overarching Lessons

In reality, Stanley's focus did a lot of people a lot of good. He taught his readers, students, and speech attendees intensely valuable lessons on how to build a better life.

Obviously, yes, that was from a financial angle. But well-taught financial lessons can impact us in every other way possible as well.

Take one of the many wise sayings from The Millionaire Next Door:

"Wealth is not the same as income. If you make a good income each year and spend it all, you are not getting wealthier. You are just living high. Wealth is what you accumulate, not what you spend."

Accepting and adopting that kind of mentality doesn't just help you save up for a more financially secure future - though it's hard to understate the value of that outcome. It also encourages an emotional, psychological and perhaps even spiritual maturity - an independence from material or mental clutter.

Just because something is "shiny" doesn't mean it's going to fulfil us in more than the mere moment, after all. It might bring short-term riches, but there's more to life than the short term.

Much, much more.

That's why, in that "Beware of Fool's Gold" article, I mentioned people who like to live it up: The ones who make sure to drive the most expensive cars that they then park at the most expensive houses where they then throw the most expensive parties.

Unless they have the money to cover all that while still setting themselves up for a secure, sustainable retirement, those kinds of people are headed toward certain disaster.

Photo Source

Companies Do It Too

It's the same thing with companies that spend money like there's no tomorrow. Look no further than WeWork for proof of that. The real estate-ish company went wild with its success… and lost perhaps everything as a result.

Forbes wrote an article earlier this month about it: "WeWork Was a $47 Billion Unicorn - Now It Plans to Layoff Up to 6,000 Employees."

...Originally Posted On Seeking Alpha

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