Eight Steps to Seven Figures : The Investment Strategies of Everyday Millionaires and How You Can Become Wealthy Too

by CARLSON, CHARLES

• ISBN13: 9780385497329
• ISBN10: 0385497326
• Format: Trade Paper
• Copyright: 2001-01-01
• Publisher: Doubleday Business

Summary

In the tradition of the megabestsellerThe Millionaire Next Door,Eight Steps to Seven Figuresbrings together in-depth interviews with over two hundred everyday people whose investments have made them millionaires. But whileThe Millionaire Next Doordescribes its subjects' lifestyles and spending habits,Eight Steps to Seven Figuresfocuses squarely on the investing strategies and principles that ordinary people have used to achieve the magic million-dollar mark. Bestselling author and chartered financial analyst (CFA) Charles Carlson reveals the keys used by the newly wealthy to reap extraordinary dividends, including a discussion of the specific stocks, bonds, and other financial vehicles they choose as part of their investment mix. In the course of the book, readers learn how to determine how much time they need to spend researching and watching over their portfolios, when to buy, and equally important, when to sell. From hundreds of accounts of those Carlson calls "Main Street millionaires," he distills eight specific investment rules anyone can follow to become financially worry-free. Among the lessons he outlines and elaborates on: "Buy and Hold and Buy and Hold and Buy and Hold"--Harness the power of time in growing your portfolio and compounding your investment returns. "Know Where You Are Going"--Determine your invest ment time frame, financial goals, and risk "comfort" level to put together a successful wealth-building strategy. "Play to Your Strengths"--Everyone has different personality strengths, investment advantages, and specialized knowledge that they bring to the table; recognize and exploit them in achieving your financial goals. One of the best things about Carlson's book is that it recognizes and allows for readers who may not have the resources to follow all eight rules. It offers reassurance and hope that there is more than one way to achieve the seven-figure pinnacle. Even people who started investing later in life, and can't fully harness the power of time, can find here the guidance they need to become wealthy. Filled with the insights and investment advice that hundreds of everyday people have followed to become rich, and buttressed with countless you-are-there stories of how these millionaires did it,Eight Steps to Seven Figuresis an absolute must for today's investors. Bestselling author and chartered financial analyst (CFA) Charles Carlson reveals the keys used by the newly wealthy to reap extraordinary dividends, including a discussion of the specific stocks, bonds, and other financial vehicles they chose as part of their investment mix. In the course of the book, readers learn how much time they need to spend researching and watching over their portfolios, when to buy, and equally important, when to sell. From hundreds of accounts of those Carlson calls "Main Street millionaires," he distills eight specific investment rules anyone can follow to become financially worry-free. One of the best things about Carlson's book is that it recognizes and allows for readers who may not have the resources to follow all eight rules. It offers reassurance and hope that there is more than one way to achieve the seven-figure pinnacle. Even people who started investing later in life and can't fully harness the power of time still can find the guidance they need to become wealthy. Filled with the insights and investment advice that hundreds of everyday people have followed to become rich, and buttressed with countless you-are-there stories of how these millionaires did it, EIGHT STEPS TO SEVEN FIGURES is an absolute must for today's investors.-->

Author Biography

Charles B. Carlson, CFA, is author of the books <b>Buying Stocks Without a Broker</b> (350,000 copies in print) and <b>No-Load Stocks</b>, and of the "DRIP Investor" and "No-Load Stock Insider" investment newsletters, reaching some 300,000 subscribers. He is also co-portfolio manager for the Strong Dow 30 Value no-load mutual fund. Carlson earned his M.B.A. from the University of Chicago, and his comments appear regularly in the top business press, from <i>Forbes</i> to the <i>New York Times</i> to <i>USA Today.</i> He lives in Hammond, Indiana.<br><br>Visit the author on the Web at: www.8stepsto7figures.com

Table of Contents

Acknowledgments	vii
Preface	xi
Introduction	xv
Author's Note	xix
You Can Be a Millionaire Investor	1	(20)
Millionaire Mistakes	21	(24)
Start Investing NOW!	45	(39)
Establish a Goal	84	(15)
Buy Only Stocks and Stock Mutual Funds	99	(26)
Swing for Singles	125	(31)
Invest Every Month	156	(21)
Buy and Hold...and Hold...and Hold	177	(22)
Take What Uncle Sam Gives You	199	(23)
Limit Shocks to Your Finances	222	(16)
You Can Do Better	238	(18)
In Their Own Words	256	(23)
Appendix	279	(16)
Bibliography	295	(8)
Index	303

Excerpts

You Can Be a Millionaire InvestorI think my experience proves that you don't have to be smart or have any special talent. Time and consistency are the key factors.
—John Conmed, New York, $5.5 million investment portfolioThere are some eight million millionaires in the United States.

My guess is that you are not one of them.

That doesn't have to be the case. Anyone can invest his or her way to a million dollars.

Anyone.

How? By following the eight simple steps in this book.

You Don't Have to Kill Bugs to Be a Millionaire

Notice I said anyone can invest his or her way to a million dollars. A lot of books have been written in recent years about millionaires. Where they live. What they wear. What they drive. In short, we know a lot about who they are. We know less, however, about how they got their millions. Oh sure, the books tell us that typical millionaires live below their means. They make building wealth a priority. They possess college degrees. Still, at the end of the day, many of these millionaires gained their wealth partly through means not available to most of us.

For example, in their bestselling book The Millionaire Next Door, Thomas J. Stanley and William D. Danko write that two thirds of millionaires are self-employed. More than one fifth of the typical millionaire's wealth is tied to his or her private business. These millionaire entrepreneurs are welding contractors, auctioneers, rice farmers, and paving contractors. They own mobile-home parks and pest-control services.

So there you have it. In order to be a millionaire, you have to be a bug killer.

Fortunately, that's not the case. You can be a retired college professor, like Millie S., fifty-eight years old and single, who has an investment portfolio worth $1.6 million. How did she do it? Simple.

Millie started investing at age fourteen.

She bought industry leaders, such as McDonald's, Walgreen, and Exxon.

Stocks everyone knows. Stocks everyone could own.

She held her stocks for ten years or longer.

Or you can be an engineer, like Pat J. Pat, fifty-seven, lives with his wife in Virginia. He's worked for the same company for thirty-seven years. Pat, who began investing at age thirty-two, has an investment portfolio of nearly $2 million. How did Pat do it?

He bought quality stocks. Pat's largest stock holdings are such familiar names as AT&T, Dell Computer, Lucent Technologies, and Bristol-Myers Squibb.

Stocks everyone knows. Stocks everyone could own.

Pat also took full advantage of his employer's 401(k) retirement program.

In short, Millie and Pat got rich using vehicles and strategies available to anyone, including yourself.

You Can Be a Millionaire Investor

How do I know anyone can invest his or her way to a million dollars? Because I've seen it done over and over again by individuals who are probably a lot like you. Individuals like Millie and Pat.

Or like my friend Saul. Saul is seventy-six years old. Saul has $2 million in stocks and bonds—a nice portfolio by any yardstick. What is especially noteworthy about Saul's seven-figure portfolio is that Saul didn't start investing until he was in his sixties.

"I didn't have any money to invest prior to that," says Saul.

Saul built his portfolio using basic approaches that you'll find in this book.

Saul focused on quality stocks that were leaders in their industries—Procter & Gamble, Exxon, General Electric, Intel. Nothing fancy, just solid companies with solid prospects.

Saul reinvested dividends.

He bought stocks on a regular basis.

He held them for a long, long time.

"Sometimes I wondered if I knew what I was doing. Sometimes I still wonder," says Saul.

His $2 million portfolio is evidence that Saul knew enough.

Or consider Sam B., age fifty. Sam, an attorney, has more than $3 million in his portfolio. How did Sam, at such a relatively young age, amass such an impressive portfolio?

He started investing at age twenty.

He took advantage of his employer's 401(k) retirement by contributing the maximum permitted by law.

He held his stocks, on average, for ten years.

He invested regularly, especially during market declines.

He bought quality stocks. "Almost all the stocks I own are blue chips, with the majority paying dividends, and no acquisition is made with the intention of disposal," says Sam.

Now I know some of you probably are saying that, sure, Sam has a seven-figure portfolio because he makes a lot of money as an attorney. Yes, Sam's income obviously gives him a leg up in the investing game. But a high income is no guarantee of a seven-figure portfolio. More than 25 million households in the United States have annual incomes in excess of $50,000; more than 7 million have annual incomes over $100,000. Yet the number of American households with a net worth of more than $1 million is around 3 million.

You might also be saying that Sam, because he is a lawyer, has some special expertise in investing.

Wrong.

Sam knew nothing about investing when he started. He educated himself via investment courses in college and publications such as The Wall Street Journal. But he was hardly born with a silver ticker tape in his mouth.

Nor does Sam spend a lot of money every year on fancy investment tools. On the contrary, Sam spends less than $250 per year on investment research.

Sounds simple, right? Listen to A. J. Wright, whose investment portfolio totals $1.7 million. "Investing doesn't have to be rocket science," says A.J. He ought to know.

A.J. was a rocket scientist.

If it is so simple to have a seven-figure portfolio, why doesn't everyone have one? Because investment success doesn't happen overnight. If you start investing today, you won't be rich tomorrow. Or a month from now. Or a year from now. Or five years from now. You will be rich twenty or thirty years from now. Most people don't want to wait that long. They want it now. And if they can't have it now, they don't bother.

Most people are not millionaire investors because investing now means delaying gratification. We live in a world where many people feel entitled to the good life right now, not when they're sixty years old. We want to consume today and have our seven-figure retirement savings waiting for us tomorrow. Unfortunately, spending today and saving tomorrow won't get you a million bucks.

Yes, successful investing is simple. But it isn't easy. Doing one sit-up is simple. Doing one sit-up every day for the rest of your life may be simple, but it isn't easy. You'll forget. You'll make excuses. You'll get bored. The upshot is that it's easier not to do one sit-up every day even though the effort to do so would be minimal. Why? Because doing the sit-up is new behavior. It's outside the norm. It's not habit.

What Saul and Sam and A.J. and other everyday millionaire investors have done successfully is incorporate simple investing strategies into their daily lives. Investing in General Electric each month is like paying the utility bill. Saving 10 percent of your salary in your employer's 401(k) plan is like brushing your teeth. Reinvesting dividends is like grabbing that cup of coffee every morning.

Investing practices become so interwoven into the fabric of your everyday life you can't imagine not doing them. It's not an option.

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Excerpted from Eight Steps to Seven Figures: The Investment Strategies of Everyday Millionaires and How You Can Become Wealthy Too by Charles B. Carlson
All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.