Additional thought of Graham White in highlights.

I really enjoyed the insights I was able to pull out of this book.  It strongly reinforces what I believe are the real fundamentals to building wealth.  You don't need a high paying job, insider trading information or an inheritance to retire wealthy.  You simply need to learn a little, build good habits, and start investing today.

I recommend you preview this book before you buy, as the style and information is much different that other books on the same topics and may not meet your needs. 


It's not what you're doing well that will ultimately make you successful, it's avoiding all the mistakes and overcoming your weaknesses that keeps you from failing.

We come upon people who are failing at most elements of personal finance, but they are managing to do one or two things really well.  Inevitably, those are the only things they want to talk about.  They don't want to discuss their weaknesses or listen to any advice.  To put it quite bluntly, these people just want to brag!

"Look at my stock portfolio!" they say.  But what about your mortgage, taxes, wills, and insurance, we reply.  "Never mind that, look at my stock portfolio!" 

Successful people - and those who want to be - are the kind of people who hire financial advisors.  People aren't rich because they hire a financial advisor, but because their inherent nature leads them to seek out the best information they can.  Think about it - the person who joins a health club is the kind of person who is - or will be - physically fit. Which health club they join has much less impact on the results than the mindset of the individual behind why they join.

They spend on average 2.4 hours per month on money matters, and that includes the time they devote to paying their bills.  This shocks most people because there are certain traits common to North American Consumers:

  1. The less money they have, the more checking and savings accounts they have.

  2. The less money they have, the more time they spend paying their bills.

  3. The less money they have, the more they micromanage it.

  4. The less money they have, the more they act like they have a lot of it.

Forget Budgeting

There's a big difference between budgeting and tracking expenses.  The former is a promise of how you will spend your money; the latter reflects how you actually do spend it.  And while budgeters often spend more than they had earlier promised themselves - creating such problems as falling into debt - trackers keep themselves well on track toward their goals.  You should do the same.

Other Surprises

8% or less read investment tips, business newspapers, or magazines, tune in to financial radio or TV shows, or frequent financial on-line sites.  Many do none of these things, yet they're financially successful anyway.  In fact, a strong case can be made that the people who don't pay attention are more likely to succeed - if only because they avoid information overload.

The Rich Carry A Mortgage Even Though They Can Pay It Off Early

Saving Moneyand  Making Money are not synonymous and the sooner you understand this, the better.  While you can reduce or even pay off your mortgage completely and save a lot of money, every dollar you give the bank is a dollar you did not invest.

Don't sock your extra money into paying your mortgage off early!  People feel they are making a good "investment" by paying off their home loan.  Because your home appreciates in value, and generally at a rate higher than your mortgage, you are better off using that money for other investments.  Use it for other investments that provide you either a higher rate of return than your mortgage rate or something that you can liquidate in case of an emergency easier than your home.

Knowing When To Invest

The best time to invest when...

  • You have money to invest

  • You plan to invest that money for a long time, and

  • Prices are low.

Diversification is ideally suited for occasions when you have money to invest and you plan to leave that money invested for a long time.  Through diversification, you can confidently invest NOW! without worrying whether prices are low - because some prices will be, while others will not.  Thanks to diversification, your average return will be just fine.

You can make excuses for why you aren't saving, or you can move past the excuses and save anyway.  You can complain about your luck, or ignore all those problems and save anyway.  It doesn't take a lot of money to produce wealth!  It merely takes a little money - and a lot of time.

  • Don't let anything stop you from saving

  • Invest young

  • Invest small amounts of money

  • Invest often

  • Invest intelligently

A 20-year-old who saves $45 a month - that's a buck fifty per day - at 12% per year (the stock market's average since 1926), will accumulate nearly $1,000,000 after 45 years.  There's hardly a 20-year-old in the country who can't manage to save $1.50 per day - if they want to, and they'll want to once the realize the value of doing so - but too many don't understand this.

There is no value in lamenting the past.  Instead, focus your energy on the future - because that is where you are headed, and that is something over which you still have total control.  "Instead of lamenting the couldabeens, focus on the whereyagoings!"

Start with a dollar a day, and if you can't manage that, start with a quarter a day.  After a while, it becomes a habit, and once you begin to experience the results of this habit, it becomes addicting.


Keeping It In The Family

It's not true that most rich people owe their wealth to inheritances.  The saying "rags to riches to rags in three generations" is largely true.  The son of a self-made millionaire might life well, but it is very difficult to preserve wealth much beyond the third generation.  If Granddad builds a net worth of $100 million, he loses half to estate taxes.  The other half goes to his three children , who get $17 million each. they each lose half to taxes at their deaths, leaving $2.8 million to each of the nine grandchildren.  Clearly, by the fourth generation, there's not much left for the 27 great-grandchildren - unless someone in the family carries on Granddad's tradition and rebuilds the family's wealth.  But if they succeed in rebuilding Granddad's wealth through their own hard work, you could hardly label their wealth as coming from "inheritance."

If you fail to talk about money with your family, major problems are likely to result.  And yet, few parents discuss the subject with their kids - whether their children are small, or well into adulthood.  

You may not talk to your kids about money, but they're learning about it from you nonetheless.  They're learning about it simply by observing you.  Ask a group of five-year-olds where money comes from and you'll hear them say, "The bank machine."  


A Client's Story

I have been on my own since the late 70's, raising my son since he was seven, and I'm proud of him for his accomplishments.  As a single parent, there were many struggles, but somehow I came through, considering there were many rough times.  The second time I was laid off in 1985, I owned a condo and my son was a teenager.  I was out of work for six months.  During that time, I rarely went out to the movie, dinner, nor very many social activities, even though it may have cost only $3.  I did some temp work while seeking full-time employment.

In 1986, when I became employed again, I enrolled in the 401(k) plan.  I was probably in my late 40's.  I started out by contributing about 1-3% each year, and I increased that percentage each year.  The majority of the time, I brown-bagged my lunch.  

It wasn't until 1987 that I bought my first new car - a Honda Civic.  For the first time in a long time I had car payments - I hated it.  Today, I am still driving that 12-year-old car.  I am very economically conscious.  I go to a cosmetology hairdressing school for my permanents and hair cuts - I would rather pay $20 for a perm than $80.

Like many single parents, there were times when I was working two jobs, just to keep abreast of daily living and raising my son.  However, most times, when I received my paycheck from my second job, I would put it away, even forget about it, later adding it to my investment accounts.  If I got a tax refund, I would not go out a blow it - it went into my investment accounts.  By 195, after being laid off for the third time and from the same company, I took the pension - a whopping $228 per month.  Each month, I'd put $100 or more into my investment accounts.

Today, my portfolio consists of two IRAs, a money market fund, four mutual funds, a bank CD, and a senior citizens savings account.  My portfolio at present is worth a little better than $200 000.  I've learned over the years to save, leave it alone, be diversified, to not dip into it, and not to put all your money into your checking account.  Pay yourself first by buying investments.

I cannot stress enough to anyone how important it is to invest and save, and to learn as much as you can about financial management.

Marcia J. Crosby, librarian.  



Ric Edelman


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