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How to Get a Little Bit Richer Every Day

By Mark Ford, wealth coach, The Palm Beach Letter
Tuesday, August 30, 2011

Of the hundreds of wealth-building strategies I have tried over the years, the best one was also the simplest. It is this: Make sure you get a little bit richer every day.
 
This thought occurred to me almost 30 years ago. I had recently decided to become rich, and that decision had me reading and thinking about wealth building day and night.
 
I had daily fantasies of getting rich in all sorts of fancy ways. But deep down inside, I knew complicated strategies were not for me. When it came to making money, I was extremely risk averse. In the race to a multimillion-dollar retirement, I was a tortoise, not a hare.
 
At the time, I had a net worth of zero and an annual salary of $35,000. With three small children and my wife in college, our expenses were gobbling up every nickel of my after-tax income. And so my first wealth-building goal was small: I would get richer by just $10 a day.
 
I knew that I would eventually raise the ante, but I wondered, "How much money would I acquire in, say, 40 years by just putting an extra $10 aside every day in a bank account earning 5% a year?"
 
I did the numbers and was happy with the answer: almost half a million dollars.
 
My total capital invested would be $149,650. The simple interest would total $156,950, and the compounded interest would amount to $182,061, for a total of $488,661.
 
Then I wondered, "What would happen if I put away $15 a day?" That came to $719,604.
 
And then I asked, "What would my retirement fund grow to at 8%?" That came to $1,620,592!
 
You can imagine my excitement. And so I made this my No. 1 wealth-building commandment: Get a little bit richer every day.
 
But I soon realized I couldn't follow this rule consistently if I invested my money in stocks. The market fluctuated too much. One day, I'd be worth $110,000, for example, and the next day, I'd be worth $108,000.
 
My friends and colleagues who knew more about investing than I did told me not to worry about these short-term fluctuations. They said that if I kept my focus on the long term, I'd get the 9% or 10% that the market delivers over a long period of time. But even though I understood the principle, I didn't want to settle for that.
 
I resolved the problem. I put the bulk of my retirement savings into municipal bonds, high-yielding bank CDs, and unleveraged rental real estate properties. This drastically reduced my portfolio's volatility but it also, in theory at least, reduced my expected ultimate return on investment (ROI).
 
I compensated for that lower ROI by taking on more work and devoting a portion of that extra income to my retirement savings. That ensured that I was always ahead of my schedule – even if the ROI I was getting on bonds, CDs, or real estate dropped.
 
This simple, tortoise-paced program worked. Since I made this resolution in the early 1980s, I have never experienced a single day of being poorer than I was the day before.
 
Think about that.
 
And there's more... Submitting yourself to this commandment will change the way you think and feel about building wealth. It will help you appreciate the miracle of compound interest. It will make you less accepting of risk. It will make it easier to understand the benefits and drawbacks of every type of investing. And it will turn you into an income addict, which is, in my book, an essential component of thinking rich.
 
If you want to use this strategy for retiring rich, begin, as I did, with a goal of $10 a day. Once that becomes easier, you will find that you want to raise the ante. You could hike it to $15 a day, as I did my first year... But soon thereafter, your addiction to income will make it possible for you to raise your target much higher than that. These days, my target is $10,000 a day – and I do it without worry.
 
I have explained this strategy to lots of people over the years. And I don't think a single one ever took it seriously. Perhaps it didn't seem clever enough for them. Or perhaps they felt they were already doing well by following the investment schemes they were using at the time.
 
But none of them ever acquired the wealth I did. They sometimes had great individual hits they'd tell me about – or even streaks of winners when the markets were favorable. But as time passed, Mr. Market always had his way with them.
 
In the race for wealth, I've always been a tortoise. But by following this simple rule of getting richer every day, I was able to do better than I ever expected, without a single day of feeling poorer than I was the day before.
 
Regards,
 
Mark Ford




Further Reading:

A self-made millionaire, Mark Ford knows all the tricks in the book for getting rich. Below, find two of his favorite wealth-building strategies...
 
By following these two simple rules, you can still make a safe, tax-free 6% return on your money... without taking any stock market risk.
 
There's a way for you to make similar deals right in your own neighborhood…

Market Notes


TOM'S AMAZING "RECESSION PROOF" INVESTMENT

In today's market notes, we take a look at a "big idea" introduced by our good friend Tom Dyson (now of The Palm Beach Letter) and say, "Well played, sir."
 
More than three years ago, Tom introduced DailyWealth readers to the idea of buying McDonald's and Wal-Mart to "recession proof" your stock portfolio.
 
Both McDonald's and Wal-Mart are strong businesses that treat their shareholders well with steady dividends. In a recession, folks are more likely to shop at Wal-Mart than Nordstrom. And they're more likely to pass on $50 steak dinners... while sticking with simple pleasures like $2 hamburgers.
 
Our chart below shows how Tom was right on. It displays the past three years of trading in shares of McDonald's. As you can see, despite the great credit crash of 2008... the recession of 2009... the "flash crash" of April 2010... and last month's "mini-panic," McDonald's has steadily advanced to a new all-time high... while paying out ever-increasing dividends. Like Philip Morris, what McDonald's does "ain't pretty"... but it works.

Tom was right: McDonald's has sailed through the recession

In The Daily Crux



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