2 Simple Steps to Think and Grow Rich

Good morning!

In today’s newsletter, we dive into Napoleon Hill’s timeless wisdom from Think and Grow Rich, sharing six practical steps to uncover your true goals and orient your actions in a definite direction. Take these foundational steps toward building a wealthy life of regular ascension toward the mountain’s peak!

This week’s newsletter includes:

• What Happened This Week

• 2 Simple Steps to Think and Grow Rich

• Variable Annuity

• Launch Your Personal Wealth Expedition!

Be sure to check out this week’s YouTube video examining the opportunities hiding in different levels of wealth (starting with zero).

NEWS
What Happened Last Week

• A US trade court ruled on Wednesday that President Trump did not have the authority to impose sweeping tariffs under an emergency powers law; however, this ruling is on hold while the Administration makes its appeal.

• The US effective tariff rate hovers around 17.8%, highest since 1934.

• Consumer debt appears to be in moderate condition, with credit card and auto debt balances shrinking in Q1; however, credit card and student loan delinquency rates have increased.

• Jobless claims still remain within what’s considered a normal range at 240,000.

• A recently released survey of the economic well-being of US households in 2024 also reveals that US households started 2025 relatively healthy financially relative to the previous two years (though still down from 2021 before inflation spiked).

• Gigs and odd jobs have become regular ways that individuals are making ends meet (more than 20% of survey respondents), and evidence exists that demand for labor may be weakening.

How I See It

The US economy remains in a state of great uncertainty as the rules of trade seem to change, or be questioned, by the day.

And that is illustrated in the conflict between feelings and actions of investors: the Fear and Greed Index indicates greed (usually associated with optimism) making a comeback, while the AAII Investor Sentiment Survey indicates pessimism and fear.

Yet despite the uncertainty and the negative sentiment, the US economy remains resilient by a number of important measures.

And that’s a very powerful signal.

President Trump obviously is significantly impacting market movement by his actions, down as well as up, but the tariff policies are likely the biggest impactor of global markets that he’s planning to employ.

Other surprises could crop up: new legislation regarding accounting rules, regulation of tech companies, geopolitical tensions, or monetary policy blunders being just a few examples.

But with what we know now, markets have had essentially three months to scrutinize the possible impacts of this new global economy, and forward-looking stock prices seem to indicate that things may not be quite as bad or scary as they seem.

Uncertainty is very high right now, well above average, and could easily be at one of the highest points it will be during President Trump’s term. He’s had about four months to lay out his plans, and while he will surely implement more surprises, none are likely so impactful to global GDP as tariffs across the board.

If markets stomach this (and it appears they will), it’s my opinion that they have room to grow from here.

As I’ve said before, the key to success is for Trump and the Fed to inspire confidence in future economic stability, because sentiment and expectations often create self-fulfilling prophecies if sustained over time.

The Fed still has monetary policy in its pocket to implement, and Trump’s intentions toward economic prosperity, are likely enough to keep low sentiment from leading us into recession this year.

“When riches begin to come they come so quickly, in such great abundance, that one wonders where they have been hiding during all those lean years.”

-Napoleon Hill

PARADIGM SHIFT
2 Simple Steps to Think and Grow Rich

Napoleon Hill, in his book Think and Grow Rich, gives a very simple formula for success:

1. You must define exactly what it is that you want.

2. You must design a plan to get there by a specific date.

In his own words, “there is one quality which one must possess to win, and that is definiteness of purpose, the knowledge of what one wants, and a burning desire to possess it.”

“Create a definite plan for carrying out your desire, and begin at once, whether you are ready or not, to put this plan into action.”

Interestingly, it seems to me that the most difficult of these two principles is defining exactly what one wants.

Sure, that probably includes a specific monetary amount. But it easily includes other things, like what someone wants to make their legacy upon this earth. How do they want to affect the world for good?

Once the definite goal is decided upon, the plan to get there seems to me the easier part. We subconsciously even begin to take micro-actions that lead us closer to that goal, if we truly desire it. With enough pondering and research upon the subject, and definite plan can be designed. And that plan will change and adjust as one begins to take their first steps.

Defining exactly what you want is something that will emerge from deep within you. Only you will know what this is.

To get the wheels turning, there are six early steps you can take:

1. Start with what comes to mind. Write down 3 roles or purposes that pique your interest (e.g. author, restaurant owner, counsellor, digital nomad, etc.).

2. Read about, listen to and join online communities of others who are doing exactly what you listed. Learn the “language” and the basics that go into the success of each.

3. Consider peripheral constraints or benefits to each: location dependence or independence, time commitment, monetary commitment, earnings potential, and specific risks involved, for example.

4. Visualize how it would feel to live a day in each of these roles. Pay attention to the feelings you experience when seeing this life in your mind’s eye.

5. If you need additional help in choosing, consider using personality tests (such as the Enneagram and Myers Briggs) to further analyze how certain roles resonate with your unique personality.

6. Choose one, and design the time-bound plan to achieve it.

Hill’s success principles are simple. But permanent indecision is a costly trait. The sooner we each have definiteness of purpose, the sooner we will naturally desire to create an actionable plan to achieve it.

FINANCIAL TOOL
Variable Annuity

Variable annuities can be a touchy subject.

Some people love them. Others hate them.

Let’s start with the elephant in the room: they’re expensive!

Why? Because they offer a safety net in a unique way. And therein lies the benefit.

Here’s how they work:

• Funding – An investor typically places a lump sum into an annuity.

• Investment Options – The investor chooses among available funds to invest in the stock market, with their account balance rising and falling with those investments.

• Annuitization – At some point in the future, the investor can annuitize, giving up access to the lump sum in exchange for a guaranteed payout (a specific percentage) for the rest of their life.

• Tradeoff – The downside of annuitizing:

  • They lose both the asset and the income stream upon death, unless protected by contract clauses like period-certain, joint-life, or refund options (all common features).

  • The investor gives up access to the asset’s lump sum value.

• Living Benefit Rider – Many annuities offer this (for an extra fee), which:

  Allows the investor to withdraw a guaranteed maximum annual income for life while maintaining access to the underlying account.

  • Keeps the option to close out the annuity and take the remaining lump sum if desired.

  • Continues guaranteed income even if the account balance hits zero (depending on the contract).

  • Provides a death benefit to beneficiaries if the investor dies before the account is depleted.

• Tax Deferral – Annuities grow tax-deferred; taxes aren’t due until withdrawals are made, and growth is taxed as ordinary income.

• Tax-Free Trades – Investors can trade within the annuity without creating taxable events. The trade-off is potentially higher ordinary income tax rates compared to capital gains rates.

• Early Withdrawal Penalties – Withdrawals made before age 59½ typically incur a 10% early withdrawal penalty.

• Surrender Charges – Annuities often carry surrender charges for early account closure. For example, a 7% surrender fee in year one, gradually dropping to 1% by year seven (varies by contract).

• Guarantee Backing – While annuity income may be guaranteed, that guarantee is only as reliable as the financial strength of the issuing insurance company (and backed by state guaranty associations where applicable).

But here’s an easily overlooked upside to annuities.

Because of the guarantees associated with them, studies suggest that investors are less likely to trade based on market forecasts. They tend to leave their portfolios alone for the most part. And this, on average, tends to improve market returns.

So it’s not obvious whether an investor would have been better off invested in another account where they were tempted to time the market, or whether they paid fees to an annuity and resultingly felt less temptation to change their strategy.

Annuities aren’t for everyone. There are typically better, and cheaper, ways to diversify and manage risk. But for those in their late career who are risk averse, a portion of their overall allocation to a variable annuity can offer a benefit of added peace of mind due to the knowledge of guaranteed lifetime income from the insurance company.

HERE’S HOW I CAN HELP
Launch Your Personal Wealth Expedition!

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Each lesson builds upon the last, covering these main topics:

• Master high-impact budgeting techniques to create a surplus today.

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• Raise your salary this year.

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Whether you're new to investing or a seasoned expert, this course is designed to make anyone a master of what I believe to be the most important investing concepts.

Here's what you'll learn in this course.

• The foundational concepts for analyzing the risk and performance of mutual funds and ETFs.

• How your goals affect the allocation of your investment portfolio.

• How to fine tune the risk factors in your portfolio to weight the odds of success in your favor.

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• How this all ties together as one comprehensive wealth expedition from ground zero to financial independence.

With investing, it often takes an understanding of just a handful of concepts to make all the difference in your ability to make tremendous wealth over time.

My goal with this course is to offer you what I see as the most important concepts to successful investing, setting you on course to achieve your dream life well in advance of retirement age using simple but powerful habits of finance.

Daniel Lancaster, CFA

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