Join Early Retirement Today
Reply
 
Thread Tools Display Modes
25 Rules to Grow Rich By
Old 11-09-2006, 10:35 AM   #1
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,228
25 Rules to Grow Rich By

While googling around, avoiding politics, I found this article. As they say in Minnesota, it's not half bad:

http://money.cnn.com/2006/10/16/pf/e...ion=2006101916

A few of the rules:

6. All else being equal, the best place to invest is a 401(k). Once you've earned the full company match, max out a Roth IRA. Still have money to invest? Put more in your 401(k) or a traditional IRA.

7. To figure out what percentage of your money should be in stocks, subtract your age from 120.

8. Invest no more than 10% of your portfolio in your company stock - or any single company's stock, for that matter.

9. The most you should pay in annual fees for a mutual fund is 1% for a large-company stock fund, 1.3% for any other type of stock fund and 0.6% for a U.S. bond fund.

10. Aim to build a retirement nest egg that is 25 times the annual investment income you need. So if you want $40,000 a year to supplement Social Security and a pension, you must save $1 million.

11. If you don't understand how an investment works, don't buy it.
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: 25 Rules to Grow Rich By
Old 11-09-2006, 10:45 AM   #2
Full time employment: Posting here.
My Dream's Avatar
 
Join Date: Sep 2006
Location: Ontario, Canada
Posts: 837
Re: 25 Rules to Grow Rich By

Thanks for sharing Martha , I haven't opened the link yet, but based on #11 alone, I shouldn't be investing period.
__________________
Newbie
My Dream is offline   Reply With Quote
Re: 25 Rules to Grow Rich By
Old 11-09-2006, 10:49 AM   #3
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,455
Re: 25 Rules to Grow Rich By

Quote:
6. All else being equal, the best place to invest is a 401(k). Once you've earned the full company match, max out a Roth IRA. Still have money to invest? Put more in your 401(k) or a traditional IRA.
When Roth IRA is maxed out, no more money can be invested into a traditional IRA, I think.
__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline   Reply With Quote
Re: 25 Rules to Grow Rich By
Old 11-09-2006, 10:52 AM   #4
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,856
Re: 25 Rules to Grow Rich By

Quote:
Originally Posted by Spanky
When Roth IRA is maxed out, no more money can be invested into a traditional IRA, I think.
Roth IRAs used to be locked out above a certain AGI ($160K? I don't remember) and that law may still be on the books.

But although you might not be able to deduct a contribution to a conventional IRA, you'll always be allowed to max the contributions.
__________________
*

Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."

I don't spend much time here— please send a PM.
Nords is offline   Reply With Quote
Re: 25 Rules to Grow Rich By
Old 11-09-2006, 10:55 AM   #5
Full time employment: Posting here.
shiny's Avatar
 
Join Date: Jun 2005
Posts: 673
Re: 25 Rules to Grow Rich By

I read those 25 too, you are right Martha, not half bad. I have a question about #7 though.

Do many of you here feel that once you've reached your financial goals (and have a suitable % of stocks) that any $ you accrue above that is ok in cash or bonds that kick out income, but don't necessarily "keep up."

Maybe this is going back to buckets, I don't know.
__________________
I'm made of atoms, you're made of atoms, and we're all in this together. Ben Lee
shiny is offline   Reply With Quote
Re: 25 Rules to Grow Rich By
Old 11-09-2006, 11:05 AM   #6
Recycles dryer sheets
 
Join Date: Jan 2006
Posts: 116
Re: 25 Rules to Grow Rich By

I liked this one
5. Never hire a roofer, driveway paver or chimney sweep who is going door to door.

I actually had a neighbor who did this twice, once to side the house (disaster) once to cut down a tree they said was in danger of falling on the house any second. Never got another estimate, went with the door to door person.

I think another great rule is don't buy anything from a commmercial on TV, especially the shopping networks. In fact, don't watch them at all. They are not your friends, they are professionals who could sell a bag of ice to someone living in Antartica in the dead of winter.

and Shiny, I feel the way you do. You need to be comfortable in your investment decisions not follow a formula. Maybe that formula is for people who plan on retiring at age 65 or 66, full social security age.
shorttimer is offline   Reply With Quote
Re: 25 Rules to Grow Rich By
Old 11-09-2006, 11:10 AM   #7
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,455
Re: 25 Rules to Grow Rich By

Quote:
Originally Posted by Nords
Roth IRAs used to be locked out above a certain AGI ($160K? I don't remember) and that law may still be on the books.

But although you might not be able to deduct a contribution to a conventional IRA, you'll always be allowed to max the contributions.
You can contribute the maximum amount to RIRA if The AGI is below $150K for a joint return. If AGI is between $150K and $160K, you can contribute a partial amount. In this case, you should be able to contribute more to a IRA account.
__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline   Reply With Quote
Re: 25 Rules to Grow Rich By
Old 11-09-2006, 12:51 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
TromboneAl's Avatar
 
Join Date: Jun 2006
Posts: 12,880
Re: 25 Rules to Grow Rich By

Quote:
24. Don't redeem frequent-flier miles unless you can get more than a dollar's worth of air fare or other stuff for every 100 miles you spend.
Related to this: last year I took the MBNA deal of $400 of air fare for the 25,000 credit card points. An alternative was a check for $250.

But what I found out was that you had to go through their travel agency, and it turned out that the $400 of air fare that I got would have cost less than $250 on priceline.com.

So, from now on I go with the cash.
__________________
Al
TromboneAl is offline   Reply With Quote
Re: 25 Rules to Grow Rich By
Old 11-10-2006, 07:53 AM   #9
Full time employment: Posting here.
sailor's Avatar
 
Join Date: May 2005
Location: Atlanta suburbs
Posts: 898
Re: 25 Rules to Grow Rich By

Quote:
Originally Posted by TromboneAl
Related to this: last year I took the MBNA deal of $400 of air fare for the 25,000 credit card points. An alternative was a check for $250.
But what I found out was that you had to go through their travel agency, and it turned out that the $400 of air fare that I got would have cost less than $250 on priceline.com.
So, from now on I go with the cash.
MBNA was/is a bad deal.
If you have preferred airline and travel enough it pays much better to have a loyalty card.
I use Delta skymiles and sometimes I can beat the mentioned ratio 10 times (i.e. getting a $5k ticket for 50000 miles).
It's typically "a waste of miles" to fly domestic, unless you go to either Alaska/Hawaii from mainland or both your origin and destination are "obscure cities".
sailor is offline   Reply With Quote
Re: 25 Rules to Grow Rich By
Old 11-10-2006, 08:19 AM   #10
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,872
Re: 25 Rules to Grow Rich By

Quote:
Originally Posted by Martha

[i]6. All else being equal, the best place to invest is a 401(k). Once you've earned the full company match, max out a Roth IRA. Still have money to invest? Put more in your 401(k) or a traditional IRA.

While I agree that the 401k is the first place to put money I still think its important to invest money after tax too. You need to build up a "rainy day" fund and if you are going to ER having a stash that is free of all the withdrawal restrictions is very useful. Here's what I'd do as your salary/savings ability increases

1) Pay off any credit card debt.
2) Put enough into 401k to get the company match, then
3) Save after tax until you have 6 month's expenses
4) Next max out your 401k (you're still saving after tax too)
5) Look at other tax deferred options in this order

ROTH (if you qualify)
457 (if you have access to one because of the befopre 59 1/2 withdrawal ability)
IRA
403b
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline   Reply With Quote
Re: 25 Rules to Grow Rich By
Old 11-10-2006, 03:20 PM   #11
Full time employment: Posting here.
Lusitan's Avatar
 
Join Date: Jan 2006
Location: Boston
Posts: 620
Re: 25 Rules to Grow Rich By

Thanks for the link, Martha!
Lusitan is offline   Reply With Quote
Re: 25 Rules to Grow Rich By
Old 11-10-2006, 06:06 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Re: 25 Rules to Grow Rich By

Quote:
Originally Posted by shiny
I read those 25 too, you are right Martha, not half bad. I have a question about #7 though.

Do many of you here feel that once you've reached your financial goals (and have a suitable % of stocks) that any $ you accrue above that is ok in cash or bonds that kick out income, but don't necessarily "keep up."

Maybe this is going back to buckets, I don't know.
Yup. I think a similar line of thinking that drives one to retire early or LBYM applies here. Once you have enough, you have enough, and don't need to sacrifice or take risks to get more. If I you're comfortable that your existing portfolio will fund your future needs (accounting for inflation, of course) I see no reason that future additions can't be used to further reduce the portfolio's volatility.

Just keep in mind that as your asset allocation turns more heavily fixed income focused, your "safe" withdrawal rate goes down - so those extra dollars can't be withdrawn at the same ~4% rate you might have targeted for your original 60/40 stock/bond portfolio.
__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Re: 25 Rules to Grow Rich By
Old 11-10-2006, 06:41 PM   #13
Full time employment: Posting here.
 
Join Date: May 2006
Posts: 857
Re: 25 Rules to Grow Rich By

Quote:
Originally Posted by 3 Yrs to Go
Yup. I think a similar line of thinking that drives one to retire early or LBYM applies here. Once you have enough, you have enough, and don't need to sacrifice or take risks to get more. If I you're comfortable that your existing portfolio will fund your future needs (accounting for inflation, of course) I see no reason that future additions can't be used to further reduce the portfolio's volatility.
Another perspective is: If you have enough money to live on then you can accept more risk for a better return.

For me... I just got 4 rules on how to get rich.
1. LBYM. Simplify your life.
2. Strive for a large income.
3. Accept the fact that life is full of risks. Choose your battles carefully. Only take big risks if there is a big reward.
4. Enjoy the journey. There is no big payoff at the end.
dmpi is offline   Reply With Quote
Re: 25 Rules to Grow Rich By
Old 11-12-2006, 05:10 PM   #14
Dryer sheet aficionado
 
Join Date: Oct 2006
Posts: 47
Send a message via AIM to excellent
Re: 25 Rules to Grow Rich By

dmpi's "4. Enjoy the journey. There is no big payoff at the end. "
Too very true.
The article's "22. Resist the urge to buy the latest computer or other gadget as soon as it comes out. Wait three months and the price will be lower."
Haha, the price of the monitor I was going to buy actually went UP after I looked at it. It still hasn't come back down, but I went with a cheaper and I think better Samsung instead. I didn't really need those 4 extra inches anyways.
Nice article.
__________________
I&#039;m here to share what I learn and learn what I&#039;ll share!<br />Have a great day!<br />(:
excellent is offline   Reply With Quote
Re: 25 Rules to Grow Rich By
Old 11-12-2006, 07:16 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 14,183
Re: 25 Rules to Grow Rich By

That's what she said...
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Re: 25 Rules to Grow Rich By
Old 11-12-2006, 07:25 PM   #16
Dryer sheet aficionado
 
Join Date: Oct 2006
Posts: 47
Send a message via AIM to excellent
Re: 25 Rules to Grow Rich By

LOL I was actually thinking that after I re-read what I wrote, but refrained from commenting on it. (:
__________________
I&#039;m here to share what I learn and learn what I&#039;ll share!<br />Have a great day!<br />(:
excellent is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Rich get richer / poor get poorer renferme FIRE and Money 158 09-10-2006 11:03 AM
"Getting Rich: The Poor Man's Guide" frayne Young Dreamers 8 05-23-2006 01:08 PM
BECOME RICH AND STAY RICH idevision Young Dreamers 12 07-27-2005 03:41 PM

» Quick Links

 
All times are GMT -6. The time now is 02:52 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.