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Question: “Do you want to be a millionaire?”
Answer: “Yes.”
Question: “Is that your final answer?”
Answer: “Yes, that’s my final answer.”
If you’re like millions of Americans, you have a dream to be a millionaire. Many people feel that all of their problems would disappear if they had a million dollars. They dream of living the good life.
Unfortunately, the only hope most folks have of becoming a millionaire is by winning the lottery or getting lucky on a TV quiz show. And even if they buy lottery tickets every week, they have a better chance of getting struck by lightning than they do of striking it rich.
So how do you become a millionaire? How can you secure wealth for your retirement years? I only know of one sure way, and that is the slow way.
Most millionaires in America today were not born into wealth. Most are first-generation millionaires, and only a few are overnight successes like the “dotcom kids.” The majority have built their fortunes the slow way. Here are some of their strategies for building wealth slowly.
• Invest early. There is no substitute for early savings and investment. The compounding of interest takes on a near magic proportion over time. Teach your children the value of saving for their futures.
• Invest regularly. If you’re normal, you’re a little short of personal discipline. It does take discipline to invest regularly. Try payroll deductions to bolster your investment plan. If you never see it, you’ll never miss it.
• Invest windfalls. Occasionally, everyone gets a little unexpected cash. Maybe your aunt dies, you get an income tax rebate or you have some other windfall. Invest it. You don’t have any obligation to spend it, so save it.
• Invest in appreciating assets. Some assets gain value, others traditionally lose value. Investing in the wrong things will diminish your wealth.
Here is a great example of how unwise spending can kill your millionaire chances. The second largest purchase that most Americans make is their transportation. Personally, I don’t care what you drive because I know it has no bearing whatsoever on your financial success and personal wealth.
John and Mary are a young couple in their early 30s. They have two children and want a bigger car. They both work and have good earning power, so they decide to buy that pricey sport-utility vehicle. They put up their old car as a down payment and agree to moderate monthly payments with a big balloon at the end of five years.
What they don’t realize is that if they had bought a slightly used car of lesser value, taking advantage of the first-year depreciation, which typically runs from 20 to 30 percent, they could easily add as much as $200,000 to their retirement wealth. I’ve done the math and I can prove it. Then, if they were to continue the practice over their lifetimes, the results would be significantly greater.
• Live on less. Cicero said, “Men do not realize how great an income thrift is.” One of the common characteristics of America’s millionaires is that they live well below their means. They drive older, non-luxury cars. They live in modest houses. They don’t buy designer clothing. They don’t consume expensive food or wine. They live on less.
So there you have it — the sure-fire way to become a millionaire. Of course, you’ll be the only one who knows just how rich you are. But who else needs to know?
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