A Not So Good Article

Saw this article that I thought would be of interest.  Of course, like most finance article, it isn't.  The perfect finance article would be:

Buy this stock at $20, it will go to $100 in twelve months, then sell it.

I've seen this article but it has never come true.  Or maybe it has but I didn't act on it but I don't think so.

Anyway, take a look at this http://articles.moneycentral.msn.com/RetirementandWills/EscapeTheRatRace/5LessonsTheRichCanTeachYou.aspx?GT1=8473

The problem with this type of article is that it doesn't tell us HOW to become millionaires.  So I will because there are only four ways to become millionaires.  Winning the lottery does not count as one of them.

Actually, becoming a millionaire is not the thing we want.  The thing we want is to have enough funds to not work if we don't want to.  Fair enough?

So the four ways are:

1)  Inherit the money.

2) Work your way up the corporate ladder.

3) Own your own business.

4)  Invest wisely.

As far as number 1--it is in the same category as winning the lottery.  You can't change your parents.

Number 2 is not that hard.  It does take time and time doesn't seem to go fast when you are young.  Believe me, it will but not right now.  Sitting there at 22 or 23 saying I might be a millionaire by the time I'm 45 is pretty hard to imagine, let alone put into reality.  So we will make it easier by breaking it up into steps.

Step 1 is maxing out every tax deferral you can imagine.  At work it will be your 401k.  Don't think about it, just max it and go on.  You will learn to live on the money you have left over.  If you don't then you have other problems.

Step 2 is getting promotions.  In any entry level job you get your salary and maybe a company match on your 401k.  That's it.  But you don't know what your boss gets or her boss or all the bosses above you.  Benefits kick in the higher you go and they get pretty juicy.  If you hit manager then you probably get into the club called, you guessed it, the Management Bonus Plan.  Think 20% to 50% of your salary paid out in a lump sum every year.  Not too shabby.

Then maybe at manager or director, you get some stock options.  I remember my first options and I didn't even think to thank my boss because the stock market was doing nothing.  But I held on to the options and made a lot of money.  Still got 'em.  Then when you reach a certain grade level you get enhanced retirement plans along with perks like car allowance and maybe even a country club membership.  I got both which I really liked.

Groucho Marx said he wouldn't belong to any club that would have him for a member.  But if you want to make the big bucks in business, get promoted.  Then don't spend more than you make.  If you get pretty far up the ladder you will make a lot of money.  Just don't fall off.

Your own business tomorrow.